By Andrew Willis
Canada’s hedge funds did exactly what they were designed to do in October, posting modest positive returns in a month that saw stock benchmarks post a sharp decline.
Domestic hedge funds were up 0.85% last month on an asset weighted basis last month, according to the latest edition of Scotia Capital’s Canadian Hedge Fund Performance Index. On an equal weighted basis, hedge funds in the Scotia Capital index were up 0.77%.
By either measure, the money managers did better than the 4.25% decline in the S&P/TSX benchmark, and the 1.98% slump in the S&P 500. And that’s what investors are looking for when they buy these funds: They pay premium fees for performance that’s not linked to moves in the broad market.
“Canadian hedge fund managers posted muted aggregate October performance with few outliers,” said a commentary on last month’s results from Scotia Capital. “Selective stock-picking on both the long and short side continued to be an important performance contributor. Canadian managers also benefited from long commodity themes, with mixed success from FX and fixed income trading.”
Year-to-date, the Scotia Capital index is up 22% on an asset-weighted basis, and 20.95% on an equal-weighted basis, while the S&P/TSX index is up 21.4%, and the S&P 500 is up 14.7%.
This index takes in 38 Canadian hedge funds, all of which have $15 million or more in assets, and at least a one-year track record.
