Canadian hedge funds underperform in March

Date: Monday, April 20, 2009
Author: Jonathan Ratner, Financial Post

The Scotia Capital Canadian Hedge Fund Performance Index finished March up 1.39% on an asset weighted basis and 2.39% on an equal weighted basis, underperforming both the S&P/TSX composite and the S&P 500 index in both respects.

The index includes 37 open and closed funds with minimum assets under management of $15-million and as least a 12 month track record of returns, managed by Canadian-domiciled hedge fund managers.

Many global markets saw sharp rallies in March, ending the month in positive territory despite heavy volatility. In the U.S. for example, every S&P 500 sector finished up.

“Financials led the rally on the back of favourable sentiment from the U.S. banking sector and towards policy announcements,” Scotia said in a report.

Better-than-expected economic data from the U.S. helped push Canada’s TSX to a 7.4% return in March.

But like their peers across the industry, Canadian hedge fund managers were largely unable to capitalize on the equity market rallies last month due to an overall defensive positioning going into the upswing, Scotia said. It also noted that there is currently a low appetite for highly directional bets.