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Hedge Funds Still Struggling: MSCI

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NEW YORK ( lending to credit-sensitive issuers were the best performers in August, as the MSCI Hedge Fund Indexes struggled to stay out of negative territory.

The early reporting funds in the MSCI Hedge Fund Composite Index returned 0.1% with 62% of funds reporting their performance through Aug. 31. In comparison, the MSCI World Equity Index was up 0.4% for the same time period. Year-to-date the MSCI Hedge Fund Index is up only 0.7%.

Of the five hedge fund sub-indexes included in the composite index, only three had positive returns in August. Those returns, though, were meager.

The MSCI Specialist Credit Index gained 0.5% in August. It was the top performer of the month and that index boasts the best return year-to-date at 6.4%. Funds included in that index are those focused on credit, including distressed securities, long/short credit, private placements and multi-process strategies.

The MSCI Relative Value Index and the MSCI Multi-Process Group Index were the other positive performers in August with gains of 0.2% each. The relative value index focuses on spread relationships between pricing components of financial assets or commodities, while the multi-process group contains funds where a single strategy does not account for more than 80% of risk capital.

The remaining indexes experienced small losses last month. The MSCI Directional Trading Index carried the biggest loss with a dip of 0.8%. For the year directional strategies have had the worst performance, reporting a loss of 4.1% year-to-date.

The MSCI Security Selection Index faired slightly better with a negative return of 0.2% in August and a positive return year-to-date of 1.5%. That index focuses on long/short managers that benefit from selecting investments and offsetting market risk.

The MSCI hedge fund database now totals more than 1,700 hedge funds. The indexes are composed of more than 190 indexes representing more than US$230 billion in assets.

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Contact Bob Keane with questions or comments at: [email protected].