| NEW YORK, July 8
NEW YORK, July 8 Hedge funds recorded their
first monthly loss in eight months in June, as they battled
volatile stock and bond markets, according to data published on
Monday by industry tracker Hedge Fund Research.
On average, hedge funds lost 1.3 percent last month, while
the broader S&P 500 stock index fell about 1.7 percent. The
decline came after seven months of gains, which had been the
longest run of positive performance since 2011 for the $2.25
trillion hedge fund industry.
Hedge funds have gained 3.6 percent for the year, trailing
the Standard & Poor's 500, which rose 12.6 percent during the
first half of 2013.
Stock and bond markets went into a tailspin in June after
Federal Reserve Chairman Ben Bernanke indicated the central bank
may begin to taper its easy money policies as early as this
The sell-off across credit markets was particularly sharp,
as yields on Treasuries, mortgage debt and corporate bonds
soared, hitting a huge number of funds that had upped their
exposure to those securities in previous months.
Relative value arbitrage funds, which are fixed
income-based, experienced their first loss in 13 months, HFR
data showed, losing almost 1 percent, with the Fixed
Income-Corporate Index posting the worst performance with losses
of 2.7 percent.
Increased market volatility overwhelmed most hedge funds in
June, "pressuring emerging market, interest rate-sensitive and
commodity-focused funds" in particular, Kenneth J. Heinz,
president of HFR, said in a statement.
"While tactical positioning and effective short hedging
mitigated a portion of the losses across these areas, June
performance was significant in that the trends of the previous
six months across most asset classes were reversed."
Emerging market equities, sovereign bonds and currencies
were all hit hard last month and the HRF index that tracks funds
that specialize in emerging markets lost 4 percent during June
alone, putting the strategy into negative territory for the
Hedge funds that focus on emerging Asian economies and Latin
America fared worst, losing 5.7 and 5.2 percent for the month,
Macro funds and commodity trading advisers (CTAs) also
failed to escape the bond rout, with macro managers down 1.45
percent for the month and CTAs falling 1.8 percent. Both
strategies are in the red year-to-date.
Stock-focused funds also fell in June, losing 1.4 percent,
but remain up 5.3 percent for the year after a strong rally in
the first few months of 2013.
Event-driven hedge funds experienced their first loss after
12 consecutive months of gains but are still up 5.4 percent for