Index Flash

Hedge funds down 0.84% in January

FEBRUARY 2010

After witnessing some record performances in 2009, hedge funds paused

for a breather in January 2010 and delivered a marginally negative
performance. The composite Eurekahedge Hedge Fund Index shed 0.84%
during the month as markets across the globe declined – the MSCI World
Index was down 4.2% amid concerns over the health of financial sector
and the global economy.

• Hedge funds outperformed underlying markets in January 2010,

losing 0.84% while global markets were down 3% to 9%.

• Latin American hedge funds witnessed 15 straight months of

back-to-back gains, up 29.38% since October 2008, while
European hedge funds posted their seventh consecutive month of
positive returns, gaining 11.57% over this period.

• Distressed debt hedge funds continued their upward trajectory

from 2009 by posting 1.61% in January 2010.

Main Indices

2009 YTD
Index Jan 2010 Est1
Returns
Eurekahedge Hedge Fund Index -0.84 19.46
Eurekahedge Fund of Funds Index -0.80 9.83
Eurekahedge Long-Only Absolute Return
-1.18 46.79
Fund Index
Eurekahedge Islamic Fund Index -0.97 21.85

Regional Indices

January was a month of marginal results across most regional investment

mandates. Early reports showed that European managers posted the
largest gains of 0.77% – the seventh month of continuous positive
results. January returns indicated a significant outperformance as the
major underlying markets were down during the month – the MSCI AC
Europe shed 5.6%. Japanese funds also fared positively, delivering
0.67% while Latin American funds posted their 15th consecutive month
of positive returns by gaining 0.27%.

After posting the best returns on record across all regional mandates in
2009, Asia ex-Japan managers witnessed some losses in January 2010 as
the regional markets registered some significant declines. The
Eurekahedge Asia ex-Japan Hedge Fund Index was down 1.69% as the
underlying markets suffered reversals through the middle of the month.

1
 Index Flash

Hedge funds down 0.84% in January

The Shanghai Composite lost 8.8% amid fears of China’s bank lending
curbs while other regional indices also posted declines as risk aversion
heightened.

2009 YTD
Index Jan 2010 Est1
Returns
Eurekahedge North American Hedge Fund
-0.41 23.84
Index
Eurekahedge European Hedge Fund Index 0.77 22.00
Eurekahedge Eastern Europe & Russia Hedge
0.24 61.70
Fund Index
Eurekahedge Japan Hedge Fund Index 0.67 6.78
Eurekahedge Emerging Markets Hedge Fund
-0.60 34.01
Index
Eurekahedge Asia ex-Japan Hedge Fund
-1.69 36.81
Index
Eurekahedge Latin American Hedge Fund
0.27 26.10
Index

Strategy Indices

In terms of strategic mandates, the bonds sector registered some strong

gains, with distressed debt managers posting another month of positive
returns. The Eurekahedge Distressed Debt Hedge Fund Index was up
1.61% as the high-yield sector continued to rally. However, widespread
risk aversion in the markets also sent money into safer high-grade
bonds, helping fixed income and arbitrage managers to post 0.83% and
1.03%, respectively.

Strategies with net long exposure to equities and commodities were

negative for January as a series of global events caused significant price
reversals in the middle of the month. The tightening monetary policy in
China, concerns over the stability of the Greek economy and the
proposed financial sector reforms from the US government reversed the
gains made in the first two weeks. Hedge fund managers, however, did
outperform the underlying markets – long/short equity managers were
down 0.79% as opposed to the MSCI World Index’s slide of 4.2%. CTA
funds lost 2.81% as commodity prices declined – the CRB Commodities
Price Index shed 6% in January 2010.

2009 YTD
Index Jan 2010 Est1
Returns
Eurekahedge Arbitrage Hedge Fund Index 1.03 22.60
Eurekahedge CTA/Managed Futures Hedge
-2.81 2.10
Fund Index
Eurekahedge Distressed Debt Hedge Fund
1.61 36.98
Index
Eurekahedge Event Driven Hedge Fund Index -0.31 38.86
Eurekahedge Fixed Income Hedge Fund
0.83 23.44
Index
Eurekahedge Long/Short Equities Hedge
-0.79 23.34
Fund Index
Eurekahedge Macro Hedge Fund Index -0.63 12.35
Eurekahedge Multi-Strategy Hedge Fund
-0.23 20.74
Index
Eurekahedge Relative Value Hedge Fund 0.28 22.56

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 Index Flash

Hedge funds down 0.84% in January

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1
Based on 36.09% of the funds reporting their January 2010 returns as at 9 February 2010.

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