September 3, 2010 / 10:49 PM / 9 years ago

Hedge funds eke out a win in rough August

* Hedge funds hug the flat line in August

* Credit Suisse sees slightly negative returns for month

* Global macro strategies still perform well

By Emily Chasan

NEW YORK, Sept 3 (Reuters) - Most hedge funds won the battle against struggling stock markets in August, but are still likely to finish the year with nearly flat returns.

Hedge funds hugged the flat line last month as the equity markets dropped, mostly eking out small gains or losses, but still beating major market indexes.

Hedge funds using global macro investing strategies were the strongest performers, while other strategies continued to stay near flat or slip lower, according to data this week.

Hedge Fund Research's HFRX Global hedge fund index finished August up 0.17 percent for the month, according to data on its website, compared with the benchmark Standard & Poor's 500 index .SPX, which fell 4.7 percent in August and the MSCI World Index .MSCIWD, which also fell about 4 percent last month.

Credit Suisse’s Liquid Alternative Beta Index, which tries to replicate return profiles of hedge funds and alternative investment strategies, fell 1.14 percent, suggesting many fund managers also saw a negative performance in the month.

“Hedge funds were negatively impacted by broad market sell-offs in August, although certain sectors showed resilience amid the increased market volatility,” Credit Suisse said in a statement.

The most positive strategies for the month, according to HFRX indexes, were quantitative funds, which rely on mathematical models, and Macro funds, which invest in everything from commodities and currencies to stocks and bonds.

The HFRX Macro Index grew 1.45 percent in August, while Credit Suisse said the Global Macro strategy was the only one of its beta indexes that was positive in the month.

Individual hedge funds do not often publicly release their results in order to keep their strategies secret. But some managers did see strong returns, even as concerns about the global economic recovery dogged markets.

Fund manager David Einhorn, who oversees $6.8 billion at Greenlight Capital, returned 4.1 percent net of all fees and expenses in August for his fund, according to a posting on the firm’s website this week. [ID:nN01140266]

Och-Ziff Capital Management Group (OZM.N), the New York fund run by Daniel Och, said assets at its flagship Och-Ziff Master Fund rose 0.27 percent in August on a total return basis and that it saw its total assets under management rise $200 million to $26.1 billion. [ID:nN02216952]

Dwight Anderson’s Ospraie Equity Fund, which buys and sells sell the stocks of commodity and materials companies, slipped 0.62 percent in August on a net basis, but is up 5.52 percent for the year.

While hedge fund managers are preserving capital and beating the market, many will still face pressure to live up to investor expectations for out-sized gains at year end.

Dallas-based Carlson Capital’s flagship multi-strategy Double Black Diamond Fund was up 0.61 percent for August and is up 6 percent for the year through August, according to a person familiar with the fund’s returns.

But like other funds, its investors may be used to seeing higher numbers. This time last year the over $4 billion fund was up about 20 percent for the year and it typically delivers annual returns of about 11 percent. (Reporting by Emily Chasan; editing by Andre Grenon)

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