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NEW YORK (Reuters) - 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 year.
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 year.
Hedge funds that focus on emerging Asian economies and Latin America fared worst, losing 5.7 and 5.2 percent for the month, respectively.
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 the year.
Reporting By Katya Wachtel; Editing by Leslie Adler