MSCI Hedge Fund Index August Outpaces July Showing

With 65% of the funds reporting, the Composite’s gain was much higher than July’s final 0.28% showing, according to an MSCI news release.   (See MSCI Hedge Fund Index Cools a Bit in July ). For the year, the Composite index is up 9.3%. The Word Equity Index was up 2% in August, 14.3% for the year.

Compared to the World Sovereign Debt Index, which returned a negative 0.6% in August, the Composite index was better for the month.  For the year, the World Sovereign Debt Index has stayed on the positive side, up 3.4%.

In the process groups, the preliminary August figures showed a two-way tie between Security Selection (62% funds reporting) and Multi-Process Group (67% funds reporting), both up 1.8% for the month. Security Selection, those managers who combine long positions and short sales with the aim of benefiting from their ability in selecting investments while offsetting systematic market risks, has now returned 11.8% year-to-date. Multi-Process, strategies that focus on spread relationships between pricing components of financial assets or commodities, is better by 12.5% on the year.

Gains were also recorded in Specialist Credit – those funds that seek to lend to credit-sensitive issuers – which was up 1.3% in August and 14% for the year with 62% of the funds reporting.

On the other hand, with 72% of funds reporting, Directional Trading, strategies based upon speculating on the direction of market prices of currencies, commodities, equities, and bonds in the futures and cash markets, was flat in August and up 6.8% year to date. Relative Value was the only process group loser in August with a 0.01% giveback but a 4.7% gain year to date with 63% of funds reporting.

The MSCI Hedge Fund Indices are composed of more than 160 indices. More than 1,700 hedge funds have agreed to participate in the database and there are over 1,550 hedge funds currently in the MSCI Hedge Fund Indices and Database.