Scotia Capital Canadian hedge fund index declines 2 per cent in April

Date: Wednesday, May 28, 2008
Author: Hedgeweek.com

The Scotia Capital Canadian Hedge Fund Performance Index finished April down 2.05 per cent on an asset-weighted basis and down 1.12 per cent on an equal-weighted basis. The index underperformed Toronto's TSX Composite index and the S&P 500 on both an asset-weighted and equal-weighted basis.

The TSX Composite rallied back in April and finished the month up 4.40 per cent, following increasing optimism over corporate results, a strong rally in commodity prices and reductions in lending rates by both the Bank of Canada and the US Federal Reserve.

Canadian hedge fund managers faced many of the same challenges as funds in the broader global hedge fund space. After de-leveraging substantially in order to mitigating downside risk, many funds were left struggling to increase liquidity to capitalise on April's market rally.

According to Scotia Capital, the best performers were those positioned with adequate funds to take advantage of the increased market volatility and to modify their positions from the previous month's challenges. Despite the continued turmoil and distress in credit markets, this month was marked by the IPO of Sprott Asset Management on the Toronto Stock Exchange.

The Scotia Capital Canadian Hedge Fund Performance Index aims to provide a comprehensive overview of the Canadian Hedge Fund universe. Index returns are calculated using both an equal and an asset-based weighting of funds.

The index includes both open and closed funds managed by Canadian-domiciled hedge fund managers, with minimum assets under management of CAD15m and at least a 12-month track record of returns.