Hedge funds were back in the black in September as global markets trended upwards during the month. The Eurekahedge Hedge Fund Index was up 1.05% while global stock indices outperformed as the MSCI World Index gained 3.87% in September.

Read: Retail clients shouldn’t own hedge funds

Key highlights include:

  • Total assets in the hedge fund industry stand at US$1.91 trillion, set to cross the highest level on record by year-end;
  • Assets in long/short equity hedge funds crossed the US$600 billion mark for the first time since 2008;
  • Asia ex-Japan hedge funds have outperformed the underlying markets by more than 7%;
  • Greater China focused hedge funds witnessed three months of positive returns, up 6.22% in Q3 2013;
  • Distressed debt investing remains the best performing strategy in 2013, up 11.25%; and
  • Japanese hedge funds remained ahead of other regions, up 21.25%.

Read: Hedge funds post mixed results

Regional indices

Global markets rose in the first few weeks as the risk of a U.S. strike on Syria declined. Positive macroeconomic data from Europe and China also pushed up market indices and the decision of the Fed to maintain the pace of asset-purchase, added further strength to the rally. Markets declined in the latter half of the month as investor focus turned to the budget impasse in the U.S. Congress.

Strategy indices

Most strategies were profitable in September with long/short equity and event driven funds posting the strongest returns on the back of strengthening equities during the month. Long/short equity funds were up 2.10% while event driven managers gained 1.90%. Increased risk appetite during the month also culminated in gains for distressed debt funds which were up 1.54% in September.

Read: Hedge funds end 7-month winning streak

CTA/managed futures funds posted yet another month of negative returns, down 0.72% — their fifth month of back-to-back losses for the managers. Trend following strategies witnessed losses due to reversals of market sentiment during the month. Managers allocating to commodities witnessed losses amid falling prices of precious metals, energy and soft commodities — the S&P Goldman Sachs Commodity Index dropped by 3.39%.