Early estimates indicate the Credit Suisse/Tremont hedge fund index will finish up 1.68 per cent in August (based on 54 per cent of assets reporting).

This will be the sixth straight month of positive performance for the overall asset class. Managers saw a wide dispersion in returns across global equity markets last month with the Shanghai equity markets closing down over 20 per cent and certain US and European markets peaking mid-month, reaching their highest levels since October 2008. Amidst the market volatility, managers with net short portfolios appeared to perform better in August than they have during previous months of the rally.

In Japan, markets rose modestly following the country’s national election and Japan-focused Long/Short Equity hedge funds were up approximately 1 per cent for the month on average, benefiting primarily from stock selection and out-performance by the small-cap sector of the equity markets.

Event Driven managers returned 2.46 per cent for the month as they continued to take advantage of tailwinds in equity and credit markets in the distressed environment. The majority of investment opportunities in the space currently appear to be coming from the special situations area. 

Convertible Arbitrage extended its run of positive performance to eight consecutive months, finishing up 3.37 per cent in August, as opportunities in the space remained strong. Performance was muted, however, in comparison to returns of the past four months, when the strategy posted consecutive monthly returns of greater than 4 per cent.