New York (HedgeCo.net) – The Hennessee Hedge Fund Index gained +1.05% in August (+2.96% YTD), while the S&P 500 gained +3.77% (+8.39% YTD), the Dow Jones Industrial Average rose +3.23% (+3.15% YTD), and the NASDAQ Composite Index jumped +4.82% (+9.67% YTD). Bonds were also positive on the month, as the Barclays Aggregate Bond Index increased +1.10% (+4.80% YTD).
“Normally a slow month, August had its best performance in 14 years.” commented Charles Gradante, Co-Founder of Hennessee Group LLC. “Long/short hedge funds did well at +1.70%. All strategies were positive except for interest rate sensitive (convertible arbitrage, high yield, distressed) and dollar sensitive strategies (emerging markets).”
“The Hennessee Hedge Fund Index was up +1.05% with the top three strategies for the month being Healthcare and Biotech (+3.15%), Latin America (+2.76%) and Technology (+1.92%).”highlighted Charles Gradante. “The bottom three strategies for the month were Short Biased (-2.06%), Distressed (-0.60%) and Opportunistic (-0.31%).”
During the month of August the VIX settled down after a sharp rise at the end of July. The VIX started the month up near 17 and dropped to under 12 as volatility subsided and markets rose, ending the month slightly above 13.
Equity long/short hedge funds were positive in August, as the Hennessee Long/Short Equity Index gained +1.70% (+3.71% YTD). The best performing sectors were health care (+4.72%), consumer staples (+4.57%), and utilities (+4.45%), while underperforming sectors were telecommunication services (-1.07%), energy (+1.83%) and materials (+3.55%). The healthcare sector continues to be the best performing sector for the year having gained +14.84% YTD through August, while consumer discretionary is bringing up the rear, having gained2.77% YTD through August.
“Most Wall Street strategists are bullish for 1 or 2 years out believing any shift in fed policy will be gradual but having hefty concerns about the leverage and momentum trading taking place.”reported Charles Gradante.
The Hennessee Arbitrage/Event Driven Index increased +0.33% in August (+4.10% YTD). The Barclays Aggregate Bond Index gained +1.10% (+4.80% YTD) as interest rates were lower for the month. High yield increased as the Merrill Lynch High Yield Master II Index rose +1.52% in August (+5.83% YTD). High yield spreads were lower in August, decreasing 20 basis points to end the month 384 basis points over treasuries. The Hennessee Distressed Index was negative in August -0.60% (+4.79% YTD). The Hennessee Merger Arbitrage Index gained +0.42% in August (+3.09% YTD). The Hennessee Convertible Arbitrage Index was negative for the month, losing -0.10% for the month (+4.39% YTD).
The Hennessee Global/Macro Index gained +0.76% in August (+0.68% YTD). The Dow Jones UBS Commodity Index was lower in August, dropping -1.05% (+0.65% YTD), while the MSCI ACWI Index gained +2.01% (+5.63% YTD) and the MSCI EAFE Index dropped -0.42% (+0.47% YTD). The Hennessee International Index gained +0.09% in August (-3.47%). The MSCI Emerging Market Index rose +2.07% (+8.50% YTD), while hedge fund managers underperformed the index, as the Hennessee Emerging Market Index lost -0.18% (+3.06% YTD).
“Macro managers continue to have difficulty gaining traction. Winning on long U.S. equities and long bonds while losing on long commodities, long Europe and long Euro positions.” added Charles Gradante.
The Hennessee Macro Index increased +1.46% for the month of August (+0.81% YTD). Fixed income managers were positive in August as bond yields were lower for the month with the 10-Year U.S. Treasury ending the month at 2.35%, down 23 basis point from 2.58% in July. Commodities were mixed for August, with gold gaining +0.37%, palladium rising +3.69% and silver losing -4.57%. Currencies were also fairly mixed for August, with the U.S. Dollar gaining +1.59%, the Swiss Franc rising +1.03%, the Australian Dollar rising +0.47% and the Japanese Yen gaining +1.25%. The Canadian Dollar lose -0.26%, the Chinese Renminbi lost -0.49% and the Euro dropped -1.93%. Oil dropped in August, with WTI falling -0.38% and European Brent Blend Crude dropping -3.64%. Natural gas crept higher during August, ending the month with a gain of +6.88%.
