Hedge funds were down 1.27%1 in June, ending the second quarter with negative returns of 1.06%. The month was marked by trend reversals in the markets and changes in investor risk appetite, which was the prevalent theme throughout the second quarter.

However hedge funds outperformed the underlying markets, as the MSCI World Index declined by 1.88%2 during the month and was down 1.77% for 2Q 2011.

Key highlights for June:

• Hedge funds outperform underlying markets in 2nd quarter by 0.71% but remain flat YTD (+0.24%)
• All strategies delivered negative returns for only the fourth time in the last ten years
• Net asset flows remained positive for the seventh consecutive month – US$1.5 billion
• Net asset flows for 1H 2011 stand at US$113.8 billion, the strongest first 6 months since 2006
• Launch activity remains strong in 2011 with more than 400 funds launched in the first half of the year