After two straight down months, the Eurekahedge Hedge Fund Index gained 0.44% in July; a month marked by high risk aversion arising from uncertain macroeconomic conditions, the ongoing debt crisis in Europe and the drawn out political debate in America regarding the US debt ceiling.
Hedge funds, ahead by 2.52% YTD, were able to provide substantial downturn protection amid these conditions while global markets were mostly down during the month as the MSCI World Index declined by 2.59%.
Returns were mixed among the regional mandates with Asia ex-Japan managers posting the best performance for the month. The Eurekahedge Asia ex-Japan Hedge Fund Index was up 1.11%, with the majority of gains coming from long/short equity hedge funds. Though Australia, China and India (the largest Asia ex-Japan markets), posted declines of 3.98%, 2.18% and 3.44%, respectively, managers investing in these countries were able to extract gains through their short exposures as well as value opportunities.
Total assets under management (AuM) increased by $16.1 billion in July, bringing the size of the industry to $1.82 trillion, and managers added $11.8 billion through performance based growth despite the subdued outlook on global markets. Additionally, investors continued to allocate capital during the month with net positive asset flows of $4.3 billion.
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