Short selling posted returns of -7.36% in October, while other hedge fund strategies failed to catch up to the recovery in the overall equities and bonds markets, according to the EDHEC-Risk Indexes.
It was a flip-flop compared to September, when short selling returned more than 8% for hedge fund investors yet all other strategies were down across the board.
Although the greatest returns for hedge funds in October were seen in the long/short equities strategy at 4.30%, even that was outpaced by the recovery in the overall equities and bond markets. The S&P 500 index, for one, posted a return of +10.93%, its best monthly performance in 20 years, the institute says. Implicit volatility also dropped.
Short selling has consistently returned greater profits for investors in 2011, far outpacing all other strategies. Year to date, even with the drop in October, short selling is up 4.7%, still greater than all other hedge fund strategies tracked by EDHEC-Risk Indexes.
In September, inflows into hedge funds began to decelerate for the first time in recent memory while returns were virtually flat.
(CG)