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Australian Hedge Funds Return 3.2% in May on Commodities Rally

Date: Monday, June 15, 2009
Author: Malcolm Scott, Bloomberg.com

Australian hedge funds returned an average 3.2 percent in May as commodities-related funds helped the industry beat gains in equities.

The Australian Fund Monitors Index, which tracks the performance of more than 200 hedge funds managed from within the country, added to April’s 2.6 percent advance, according to a report by Australian Fund Monitors based on 35 percent of the funds reporting. The Reuters/Jefferies CRB Index of energy, agriculture and metal prices rallied 14 percent in May, while the benchmark S&P/ASX 200 Index climbed 1 percent.

“Normally in a positive month, hedge funds underperform equities,” said Chris Gosselin, chief executive officer of the Sydney-based industry researcher. “It takes a manager a month or so to get on the new trend, and most managers have now adjusted to the uptrend very well.”

The nation’s hedge funds have climbed 6.6 percent in 2009, rebounding from last year’s record 18 percent decline. Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether the price of assets will rise or fall.

Commodities CTA funds, which trade futures on raw materials, boasted the best-performing strategy last month with a 9.8 percent advance. Commodities Strategies Ltd.’s onshore A$19 million ($15.3 million) fund jumped 11.2 percent in May, while the $24 million Argus Dynamic Multi Strategy Program returned 7.6 percent, according to AFM’s report.

Equity-long funds, which wager on rising share prices, were the second-best performing strategy, adding 4.7 percent. Equity 130/30 funds, which bet on falling as well as rising stocks, were the worst performers, losing 0.7 percent.

Global Gains

Globally, hedge funds returned an average 5.2 percent in May, the best performance in more than nine years, as they attracted more money and global markets rallied, Eurekahedge Pte said last week.

The Eurekahedge Hedge Fund Index, tracking more than 2,000 funds, has returned 9.2 percent this year, according to a preliminary report by the research firm. The industry recorded net inflows for the first time in 10 months in May, with a $1.5 billion gain, while total assets rose by $5 billion, it said.

Hedge-fund managers are outperforming global benchmarks after the worst year on record in 2008, when Eurekahedge’s global index slid 12 percent, the most since the Singapore-based firm began tracking data in 2000. The MSCI Asia Pacific Index rose for a third month in May, advancing 12 percent in its longest stretch of monthly gains since July 2007.

To contact the reporter on this story: Malcolm Scott in Sydney at Mscott23@bloomberg.net