Hedge funds limited losses in first half of August

As the equity markets have bounced to extreme levels of volatility in August, most hedge fund categories have remained relatively stable. Through the first two weeks of the month, while the S&P 500 Index fell by 13.2%, the Dow Jones Credit Suisse Core Hedge Fund Index was down 3.7%. According to Credit Suisse Index Co. LLC, managed-futures funds had the strongest performance in August with a 1.8% category average gain. The worst-performing category was long-short equity, which was down 6.5%. “Despite challenging conditions, hedge funds appear to have so far been effective in their attempt to provide a level of capital preservation, and overall have limited losses relative to perceived riskier asset classes such as equities,” said Oliver Schipp, president of Credit Suisse Index Co. From the start of the year, the broader hedge fund index is down 4.5%, compared with a 9.8% drop by the S&P. The fixed-income-arbitrage category, which fell by 0.6% in the first half of August, is still up 1.5% from the start of the year. Managed-futures funds is another category still in positive territory on a year-to-date basis, up 0.82%. The worst performing hedge fund category on a year-to-date basis is event-driven, down 5.1% this month and down 7.8% so far this year. Global macro hedge funds are down 3.4% this month and 7.4% from the start of the year.