Hedge fund strategies tracked by Lipper posted positive performance in July as global stock markets traded in a consolidation mode on better quarterly earnings and forward-looking expectations of better economic conditions ahead, according to the data provider's latest report. Data from another provider, Eurekahedge, reflected a quieter month for hedge funds in June, when its overall hedge fund index was down 0.02%.

Aureliano Gentilini, Milan-based global head of hedge fund research at Lipper, notes that equity-focused and directional strategies outperformed relative-value and credit-focused managers in July.

Resuming the trend shown in April and May, the best performing strategy last month was long only (+4.75%) by a wide margin.

Equity hedge strategies displayed solid performance in line with global stock markets. Global stock markets climbed 8.50% in July as reflected in the MSCI World TR Index reading, with the US equity market rising 7.56%, according to the S&P 500 Index.

"Quarterly corporate earnings reports and better-than-expected home prices and new home sales buoyed investor confidence about an imminent economic recovery," says Gentilini.

Many hedge fund managers benefitted from the strong rallies in equity markets worldwide, so it is too early to say if the world of alternative investments is indeed on its way to recovery following an extremely challenging past 18 months.

Meanwhile, trailing at second place in the performance charts was option arbitrage (+0.88%) followed by long/short equity (+0.81%). Thanks to the good showing across all hedge fund strategies, multi-strategies performed relatively well (+0.81%). Event-driven was the laggard, posting a 0.19% return.

Average hedge fund strategy performance in July, according to Lipper: 

  • Convertible Arbitrage +0.3453%
  • CTA +0.3592%
  • Dedicated Short Bias +0.3959%
  • Emerging Markets +0.5524%
  • Equity Market Neutral +0.3159%
  • Event Driven +0.1921%
  • Fixed Income Arbitrage +0.6174%
  • Global Macro +0.7167%
  • Long Only +4.7494%
  • Long/Short Equity +0.8118%
  • Managed Futures +0.2584%
  • Multi Strategies +0.8065%
  • Options Arbitrage +0.8711%