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July was an exceptionally volatile month in world events, and July hedge fund performance reflected that volatility with an aggregate performance of negative 0.35% for the month. This marked the industry’s fourth (non-consecutive) down month in 2014, and dropped year-to-date hedge fund returns to 2.62%, according to the eVestment July 2014 Hedge Fund Performance Report.
Some key points from the July report include:
- Hedge funds report rising short exposure heading into July, with long/short equity funds’ median net exposure being the lowest since February 2010.
- Distressed fund performance was negative in July amid a sell-off across high yield markets. The group still remains the best performing major hedge fund strategy in 2014.
- Activist funds declined in July, but still outpaced S&P for the month and, at year-to-date returns of 2.98%, are still on track to outpace the aggregate hedge fund industry returns.
- Commodity funds outperformed in July amid sharp price declines across the commodity spectrum, giving commodity funds a year-to-date performance of 3.12%. But this aggregate of commodity performance hides some big drops in specific commodity segments.
- Options/volatility strategies posted above average declines in July, hurt by the sharp uptick of volatility during the month.
- Large macro and managed futures funds were hurt in July as the U.S. dollar surged against all major currencies and equity market declines.
