September 2008 HF Indices

Date: Tuesday, October 7, 2008
Author: Eurekahedge

September was a historic month for global financial markets, as the bankruptcy or bailing out of major, centuries-old institutions in the US and Europe brought the year-long turmoil in the markets to a boil. The S&P500 witnessed its biggest single-day fall since 1987, eventually finishing the month down 9.1%. Crude oil prices saw double-digit declines and the Dow Jones-AIG Commodity Index shed 11.6% on the month. The markets were further roiled by uncertainty over the US Treasury’s proposed US$700 billion bailout Bill and the Congressional debates surrounding it. In the wake of these market movements, regulators in the US and UK initiated (and later extended) unprecedented bans on short-selling a wide basket of financial company stocks, with clauses on disclosure of existing short positions. These were quickly followed by similar bans in equity markets in Australia and Taiwan.

The shorting bans and attendant disclosure clauses, coupled with distress across some of the largest service providers to the hedge fund industry, and anticipated redemption pressure from investors, weighed heavily on hedge fund managers during the month. Amid such heavily negative news, preliminary reports on fund performance during September sound an encouraging note on the resilience of the hedge fund industry – the composite Eurekahedge Hedge Fund Index shed a relatively modest 3%* on the month.