HFRI Fund Weighted Composite Index rose 2.9 percent in third quarter, driven by equities and emerging markets
Global hedge funds posted gains for a fourth straight month in September, bringing fourth-quarter increases to almost 3 percent, amid the new round of quantitative easing in the US and an improved outlook for the European sovereign debt crisis, according to analysts at Hedge Fund Research.
The increases have prompted more institutional investors, including some who have committed little or no resources to hedge fund investments, to look to hedge funds as a diversification tool, according to HFR, which specializes in hedge fund research, indexation and analysis.
The HFRI Fund Weighted Composite Index rose 1.1 percent in September, the best month for the index since February, bringing third-quarter gains to 2.9 percent and the year-to-date increase to 4.7 percent, HFR says in a press release. Funds with a focus on equities led the increases.
`Despite continued uncertainty, the global macro environment improved significantly in 3Q12 as reflected by rising equity markets, increasing investor risk tolerance, supportive financial market liquidity and enhanced hedge fund performance,’ says Kenneth Heinz, president of HFR, in the release.
`As a result, institutional investors which had historically maintained small or no allocation to hedge funds are currently exploring or proceeding with commitments to alternative assets as a prudent mechanism to reduce equity market volatility, enhance fixed income portfolio yields and increase the likelihood of achieving required return targets.’
The HFRI Equity Hedge Index, comprised of funds that focus on equities and equity derivative securities, gained 1.9 percent in September, brining gains for the year so far to 5.5 percent.
Macro funds, which have a higher level of exposure to commodities, were the worst performers of the month, prompting a decline of 0.3 percent in the HFRI Macro Index in September and lowering the year-to-date gains to 0.6 percent. It was the second straight monthly decline for macro funds.
By percentage increases, funds focusing on emerging markets, particularly on Asia and Eastern Europe, performed best. The HFRI Emerging Markets Index gained 3.1 percent in September and 5.4 percent in the first nine months of the year.
Hedge funds focused on emerging markets in Asia fared best, increasing 4.9 percent in September and 6.1 percent over the year to date. Funds focusing on Russia and Eastern Europe followed, rising 3.6 percent in the month and 4.2 percent in the first nine months of 2012.
The HFRI Fund of Funds Composite Index, which measures hedge funds that invest with multiple managers through funds or managed accounts with an eye on lowering volatility, increased 0.8 percent in September and 3.3 percent so far in the year, according to HFR.
