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HEDGE FUND INDUSTRY GLOBAL NEWS ROUND-UP • RESEARCH • ABSOLUTE UCITS • DATA

Global

Brieﬁng

Volume 4 Issue 1 November 2010 A HedgeFund Intelligence publication

geFun

Intelligence

Global equities rally while Japan alters

GLOBAL SUMMARY

The market rally of September continued into October as furthereconomic data was released and increased expectation of furtherquantitative easing by the Fed pushed markets higher. As Q3 earnings continued to be released during October, better-than-expected corporate results pushed the markets higher globally, exceptfor Japan – as a country dependent on exports saw the weakeningUSD push the yen higher. While the Bank of Japan looked to cut ratesand pump more money into the economy, the Nikkei and TOPIX stilldecreased for the month – down 1.78% and 2.24% respectively.While equity markets rallied – the MSCI the World Index increased3.73% for October to a gain of 6.47% for the year – hedge fundsunderperformed their equity benchmarks with the HedgeFundIntelligence Composite Index median gaining 1.65% for October andup 5.66% for 2010. On a regional basis, the US is the star performer,gaining 7.03% for the ﬁrst 10 months of the year compared toEurope and Asia up 4.5%.Emerging Market Debt, which has seen a growth in demand, is thestar performer for the year – out in front, with a median gain of over9%. Demand for emerging market bonds increased as developedmarkets remain shaky, with investors moving away from ‘riskierassets’ such as developed market bonds.While markets have been boosted by the rally of the past couple of months, November, so far, has seen a number of conﬂicting data – shock mid-term election results, sovereign problems in Europe andfurther quantitative easing in the US – so it will be interesting to see whether this rally will continue through to the end of November.

CONTENTS

1 Global summary3 The Americas summary

US Q3 GDP up 2% as slow recovery continues

4 Europe summary

Fears o a double-dip recession recede

5 Asia-Paciﬁc summary

Global equities respond to quantitative easing

6 Funds o unds summary

Commodities and equities remain strong

8 Absolute UCITS

Latest UCITS III developments

9 Research

UCITS mirror ofshore unds’ perormance

11 Data

October sees 93 new unds onstream

12 Latest weekly news For more inormation please contact:

Damian Alexander

: dalexander@hedgefundintelligence.com

tel:

+44 (0)20 7779 7361

Medians MeansStrategy Oct-10 YTD Oct-10 YTD

Equity 1.74% 3.91% 2.24% 5.89%Macro 0.74% 4.75% 1.34% 5.68%Managed Futures 2.86% 6.34% 3.61% 9.47%Event Driven 1.98% 7.32% 3.00% 9.28%Emerging Market Debt 1.21% 9.21% 1.53% 11.66%Emerging Market Equity 2.57% 6.27% 2.72% 8.17%

HFI Global Composite 1.65% 5.66% 2.10% 7.01%

GLOBAL INDICES (EST)

%MSCI World Index - NetHedgeFund Intelligence Global Index - MacroHedgeFund Intelligence Global Index - Managed FuturesHedgeFund Intelligence Global Index - Event DrivenHedgeFund Intelligence Global Index - EquityHedgeFund Intelligence Global Index - Emerging Market EquityHedgeFund Intelligence Global Index - Emerging Market DebtHedgeFund Intelligence Global Index - Composite-50050100150200250300350

O c t - 1 0 O c t - 0 9 O c t - 0 8 O c t - 0 7 O c t - 0 6 O c t - 0 5 O c t - 0 4 O c t - 0 3 O c t - 0 2 O c t - 0 1 O c t - 0 0 O c t - 9 9 O c t - 9 8

Global

Brieﬁng

is a ree monthly publication

To subscribe please go to www.hedgefundintelligence.com/globalbrieﬁng.aspx

GLOBAL COMPOSITE MEDIAN INDICES

Awards 2010

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US Q3 GDP up 2% as slow recovery continues

Covering the single manager hedgefund industry in the Americas

HEDGE FUND STRATEGIES

Equities

A combination of improved economic data, stronger-than-expected earnings reports and the Fed’s impending second round of quantitative easing allowed September’s equity rally to continue intoOctober. Managers made gains, through both their short and long books,as investor uncertainty regarding the actual extent of QEII led to stockprices swinging, and some of September’s gains being reversed with theS&P 500 Index ending the month up 3.69%. US and Global Equity fundsreturned an estimated 2.32% and 1.57% respectively, while Tech fundsreturned an estimated 3.13%.

Macro

Macro funds were up 1.73% for the year, bringing their year-to-date to6.40%. Funds with long positions in gold and foreign currencies wererewarded, as non-dollar currencies beneﬁted from QEII anticipation. Asian-based currencies were also particularly proﬁtable this month.Short positions in sovereign bonds had little impact, as funds continuedto lower their exposure ahead of the mid-term elections and theannouncement from the Federal Reserve.

Commodities/CTAs

Commodity-based funds and CTAs returned an estimated 3.98% and2.79% for the month respectively. The USDA crop conditions reportreleased early on in the month provided a large boost to grains asagricultural commodities in particular provided signiﬁcant gains lastmonth. Long positions in corn and sugar were advantageous, whilemanagers with short positions in copper experienced losses.

Credit

The Absolute Return Credit Index returned an estimated 1.89% for themonth, bringing its year-to-date to 10.77%. Gains were made fromconvertible securities as a limited supply and strong investor demandled to higher valuations. Despite an increase in convertible new issuance,it is still not equal to the number of redemptions and maturities.

Medians MeansStrategy Oct-10 YTD Oct-10 YTD

Mixed Arbitrage Index 0.38% 4.79% 0.78% 6.28%Commodities Index 3.98% 5.28% 4.92% 10.02%Convertible & Equity Arbitrage Index 2.23% 9.89% 2.23% 10.54%Credit Index 1.89% 10.77% 2.07% 13.22%Distressed Index 1.58% 10.01% 1.73% 10.81%Event Driven Index 2.79% 10.49% 3.39% 10.74%Fixed Income Index 1.00% 8.47% 1.09% 8.99%Global Equity Index 1.57% 4.31% 2.04% 5.49%Latin American Debt Index 0.90% 6.00% 0.50% 5.83%Latin American Equity Index 2.16% 8.42% 2.43% 10.88%Macro Index 1.73% 6.40% 2.07% 7.64%Managed Futures Index 2.79% 6.50% 3.46% 9.74%Mortgage Backed Securities Index 0.85% 8.65% 1.73% 12.10%Multi-Strategy Index 1.60% 6.59% 1.76% 6.41%Technology Index 3.13% 7.58% 3.15% 11.23%U.S. Equity Index 2.32% 4.81% 2.70% 8.04%

Absolute Return Composite Index 2.00% 7.03% 2.55% 8.65%

ABSOLUTE RETURN INDICES (EST)

%S&P 500MSCI WorldAbsolute Return Composite IndexAbsolute Return Global EquityAbsolute Return U.S. Equity-50050100150200250300

O c t - 1 0 O c t - 0 9 O c t - 0 8 O c t - 0 7 O c t - 0 6 O c t - 0 5 O c t - 0 4 O c t - 0 3 O c t - 0 2 O c t - 0 1 O c t - 0 0 O c t - 9 9 O c t - 9 8

MARKET EVENTS

• Consumer spending rises by 2.6% in the third quarter, its astestgrowth since 2006• Private sector adds 43,000 jobs to the economy• Sugar prices closing in on 30-year high• Retail sales boosted by late back-to-school buying

Global

Brieﬁng

is a ree monthly publication

To subscribe please go to www.hedgefundintelligence.com/globalbrieﬁng.aspx

November 2010

ABSOLUTE RETURN MEDIAN INDICES VSMSCI WORLD INDEX AND S&P 500