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Hedge Funds Return 0.6% in November, Beating Stocks as Japan Managers Lead

Date: Thursday, December 9, 2010
Author: Tomoko Yamazaki, Bloomberg

Hedge funds rose 0.6 percent in November, led by Japanese managers, and outperformed global equity markets that fell during the month, Eurekahedge Pte said.

Hedge funds posted positive returns for the fifth consecutive month, with the Eurekahedge Hedge Fund Index, which tracks more than 2,500 funds worldwide, increasing 7.9 percent in the first 11 months, the Singapore-based data provider said in an e-mailed report. About $5 billion went into the industry last month, Eurekahedge said, based on data from 32 percent of funds that have so far reported their November performances.

Managers who invest in Japan and those employing equity- related strategies led the month’s gains, helped by an increase in Japanese stocks, the preliminary report showed. The MSCI World Index declined 2.4 percent in November.

The measure tracking Japan-focused funds gained 2.4 percent, the best performer among seven regional indexes, as the benchmark Topix index climbed 6.2 percent during the month. The Eurekahedge Eastern Europe & Russia Hedge Fund Index followed, rising 1.7 percent, while the index tracking North American funds added 1 percent, it said.

Among the seven regional indexes, only the Eurekahedge Emerging Markets Hedge Fund Index declined, the report said.

By strategy, event-driven funds, which invest in companies undergoing transactions such as mergers or spinoffs, were the top performers, returning 1.4 percent, helped by increased corporate activity this year, Eurekahedge said. By contrast, the index tracking fixed-income hedge funds declined 0.8 percent, the worst performer.

The research firm plans to release a full report later this month.

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.

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