If you follow the financial markets closely, you may have noticed that trend-following hedge funds faced some challenges in August. According to data from Societe Generale, these funds suffered losses due to their bets on the New Zealand dollar and Japanese stocks and bonds during a period of extreme market volatility.
Despite finishing the month with long positions in Japanese government debt, U.S. equities, and the Australian and New Zealand dollars, trend-following hedge funds saw some of their favored asset classes turn into loss-making ventures this year. The worst bets in August included 10-year Japanese government bonds, the New Zealand dollar, and German and Italian stock markets.
While some hedge funds saw double-digit performance declines in August, others that focused on shorter-term trades recorded positive results. Funds from Revolution Capital Management, Altiq, and Crabel Capital Management finished the month with between a 3.8% and 4.5% positive performance.
Overall, the market turbulence in August was short-lived, with world stocks bouncing back to record highs later in the month. Despite the challenges faced by some hedge funds, it's important to note that not all funds suffered losses. Drury Capital Management and SEB Asset Management, for example, are still up for the year to end-August, according to SocGen data.
It's crucial for investors to stay informed about market trends and fluctuations, as these can have a significant impact on their finances. Understanding the performance of different hedge funds and asset classes can help individuals make more informed investment decisions and navigate volatile market conditions with greater confidence.