13 October 2021 index flash update: Hedge funds down 0.33% in September as rising inflation and hawkish central bank communications dampened investor risk-on sentiment
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The Eurekahedge Hedge Fund Index Down 0.33% In September
The Eurekahedge Hedge Fund Index was down 0.33% in September 2021, outperforming the global equity market as represented by the MSCI ACWI (Local) which returned -3.55% over the same period. Concerns over rising inflation continue to weigh on markets with the Federal Reserve raising its inflation forecast for the year to 4.2%, up from the previous estimate of 3.4%, driven by supply chain bottlenecks and the developing energy crisis in Europe and China which has pushed energy prices up by 11.60% in September.
Hedge fund managers returned -0.33% in September, outperforming the global equity market as represented by the MSCI ACWI (Local) which returned -3.55% during the month. In terms of 2021 performance, global hedge funds were up 8.27%, recording the strongest September year-to-date return since 2009 despite the ongoing pandemic. Around 76.7% of the constituents of the Eurekahedge Hedge Fund Index generated positive returns in 2021.
On an asset-weighted basis, hedge funds returned -0.93% in September, as captured by the Eurekahedge Asset Weighted Index – USD. In terms of 2021 performance, the index is only up 3.04%, highlighting the struggles for some of the larger asset managers over the year.
The Eurekahedge North American Hedge Fund Index returned -0.15% in September, outperforming the S&P 500 and DJIA which returned -4.76% and -4.29% respectively. American stock markets came under pressure after the Fed stated that the tapering of quantitative easing would likely begin in November 2021 and will finish by mid-2022. On a year-to-date basis, North American fund managers were up 11.71%, recording their best September YTD performance since 2009.
The Eurekahedge European Hedge Fund Index returned -0.05% in September, outperforming the pan-European Euro Stoxx 50 which returned -3.53%. Market risk sentiment was dampened due to the developing energy crisis in Europe and the heightened political uncertainty post-Germany elections. On a year-to-date basis, European fund managers were up 7.71%, recording their best September YTD performance since 2009.
The Eurekahedge Distressed Debt Hedge Fund Index gained 1.02% in September, extending their streak of consecutive positive monthly returns to twelve months. On a year-to-date basis, distressed debt hedge funds outperformed all of their main strategic peers and were up 13.14%, recording their best September YTD performance since 2009.
The Eurekahedge Commodity Hedge Fund Index gained 2.81% in September, supported by the strong return of the S&P GSCI Index which returned 6.03%. Energy was the best performing component in September, posting a return of 11.60% as Brent Crude Oil and West Texas Intermediate Crude Oil surged 9.52% and 9.91% respectively after OPEC+ decided to keep supplies tight despite the ongoing global energy crunch. On a year-to-date basis, commodity hedge funds were up 12.85%, recording their best September YTD performance since 2006.
Fund managers focusing on cryptocurrencies returned -9.05% in September as tracked by the Eurekahedge Crypto-Currency Hedge Fund Index, outperforming Bitcoin which returned -11.61% over the same period. In terms of 2021 return, cryptocurrency hedge funds have gained 119.84%, outperforming Bitcoin which returned 44.39% over the first nine months of the year.
