Hedge Funds Have Best Month in Over a Year, Eurekahedge Says

Date: Wednesday, October 17, 2007
Author: Tomoko Yamazaki, Bloomberg.com

Oct. 17 (Bloomberg) -- An index tracking global hedge funds had its best month in over a year as the Federal Reserve cut the overnight lending rate by a larger-than-expected half a percentage point, according to Eurekahedge.

The Eurekahedge Hedge Fund Index, which tracks the performance of 2,566 funds investing globally, gained 3.4 percent in September, the biggest advance since January 2006, according to preliminary figures compiled by Eurekahedge, a Singapore-based hedge-fund research and publishing company.

The Fed on Sept. 18 reduced its benchmark lending rate by half a percentage point to 4.75 percent, more than most economists surveyed by Bloomberg predicted. Policy makers also pledged to ``act as needed'' to prevent mortgage defaults from weakening the broader economy. The rate cut triggered gains in global equities last month, pushing the MSCI World Index up 4.6 percent, the best month since November 2004.

Regional indexes also rebounded after the turmoil in the U.S. subprime loan market in August. The Eurekahedge North American Hedge Fund Index advanced 3 percent, while the one tracking European hedge funds added 0.3 percent.

In Asia, the Eurekahedge Japan Hedge Fund Index, which tracks 124 funds investing in Japan, climbed 1.1 percent, after having its biggest drop since it started in January 2000 in August. The index tracking hedge funds investing in Asia ex- Japan jumped 6.1 percent in September, making it the best- performing region as domestic currencies strengthened versus the dollar.

To contact the reporter on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net .