From Global Asset Management
Asset prices drifted lower on seasonally light volumes during August. Equities and bonds sold off, with the MSCI World index down 2.1% and the Barclays Global Aggregate Bond index down 0.5%, both in US dollar terms. Commodities gained in aggregate, led by energy and precious metals, while wheat and corn declined on the month.
Hedge fund performance for August was negative as measured by the HFRX Global Hedge Fund index, which was down 0.8%, bringing year-to-date performance to 3.4%. Performance for each of the four main hedge fund strategy categories was negative between -0.2% and -1.7%, according to HFRX strategy index data.
Anthony Lawler, Portfolio Manager at GAM, said: “Volumes were light as expected during August and investors remained focused on the lingering issue of the timing and magnitude of Fed tapering. Given this focus, markets were volatile as investors assessed new growth-related data and expected central bank reactions to that data. Coming into August, managers were positive on US equities and the US dollar, and negative on China-related emerging markets growth plays. Most of these trades were choppy and did not produce much in August, with even emerging markets weakness being concentrated in a few specific countries rather than a broad sell-off.”
Lawler stated that hedge funds continue to see signs of dispersion and opportunity: “Hedge funds generally remain positive on, and exposed to, several markets and trades, which in August chopped around without delivering much upside. Although managers like US equities and are mainly interested in playing this from the long side, there are also attractive short opportunities given the market’s renewed focus on the fundamentals of individual equities and sectors. Other areas of focus and allocation include event driven strategies, given cash levels and expected corporate activity, and long US dollar versus several emerging markets currencies and versus the Japanese yen.”