Key Takeaways
- • Hedge funds advanced 0.32% in October 2012, with year-to-date performance reaching 6.09%, according to BarclayHedge data covering 18 fund indices.
- • Distressed Securities Index led October performance with a 2.40% gain, driven by yield-hungry investors seeking high-yield credits amid artificially low government bond rates, per Sol Waksman, BarclayHedge founder and president.
- • Thirteen of eighteen BarclayHedge indices posted positive October returns; secondary performers included Equity Short Bias (1.08%), European Equities (1.00%), Event Driven (0.78%), and Multi Strategy (0.57%).
- • Year-to-date leaders were Healthcare and Biotechnology (13.60% gain) and Distressed Securities (10.03% gain), while Equity Short Bias suffered the largest loss at -17.15% for the full year.
- • Fund of Funds Index declined 0.19% in October but remained positive at 2.98% year-to-date; all strategies except Equity Short Bias showed positive annual returns.
Summary
Hedge funds posted modest gains in October 2012, advancing 0.32% according to BarclayHedge's performance indices tracking 18 distinct fund strategies. The broader market backdrop of historically low government bond yields continued to influence capital flows, with yield-seeking investors gravitating toward higher-yielding credit instruments. This dynamic proved particularly beneficial for distressed securities strategies, which emerged as the month's strongest performer.
Distressed Securities led October's performance with a 2.40% gain, substantially outpacing the broader hedge fund index. Sol Waksman, founder and president of BarclayHedge, attributed this outperformance directly to the yield-seeking environment: "Distressed securities funds are benefitting from artificially low interest rates on government bonds that are driving yield-hungry investors into high-yield credits." This structural tailwind positioned distressed strategies as one of 2012's best-performing categories on a year-to-date basis, with gains of 10.03%.
Diversification across hedge fund strategies was evident in October's results, with 13 of 18 tracked indices posting positive returns. Beyond distressed securities, gainers included Equity Short Bias (1.08%), European Equities (1.00%), Event Driven (0.78%), and Multi Strategy (0.57%), reflecting strength across multiple investment approaches. Performance dispersion widened considerably over the full year, with Healthcare and Biotechnology delivering the strongest annual returns at 13.60%, while Equity Short Bias suffered substantial losses of -17.15%. All other strategies tracked by BarclayHedge recorded positive year-to-date returns.
The Barclay Fund of Funds Index, a broader barometer of diversified hedge fund investing, declined modestly by 0.19% during October but maintained positive year-to-date performance of 2.98%, underscoring the resilience of diversified hedge fund portfolios despite sector-level volatility.
Distressed Securities led October's performance with a 2.40% gain, substantially outpacing the broader hedge fund index. Sol Waksman, founder and president of BarclayHedge, attributed this outperformance directly to the yield-seeking environment: "Distressed securities funds are benefitting from artificially low interest rates on government bonds that are driving yield-hungry investors into high-yield credits." This structural tailwind positioned distressed strategies as one of 2012's best-performing categories on a year-to-date basis, with gains of 10.03%.
Diversification across hedge fund strategies was evident in October's results, with 13 of 18 tracked indices posting positive returns. Beyond distressed securities, gainers included Equity Short Bias (1.08%), European Equities (1.00%), Event Driven (0.78%), and Multi Strategy (0.57%), reflecting strength across multiple investment approaches. Performance dispersion widened considerably over the full year, with Healthcare and Biotechnology delivering the strongest annual returns at 13.60%, while Equity Short Bias suffered substantial losses of -17.15%. All other strategies tracked by BarclayHedge recorded positive year-to-date returns.
The Barclay Fund of Funds Index, a broader barometer of diversified hedge fund investing, declined modestly by 0.19% during October but maintained positive year-to-date performance of 2.98%, underscoring the resilience of diversified hedge fund portfolios despite sector-level volatility.
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