Bengaluru, October2, 2015: Hedge funds declined in August as global equity markets experienced sharp losses led by uncertainty over Chinese growth, falling oil prices and the timing of US Federal Reserve interest rate increases, according to data released by Hedge Fund Research (HFR http://www.hedgefundresearch.com ). The HFRI Fund Weighted Composite Index (FWC) fell 1.87% for the month to an NAV of 12443.31, paring the YTD performance for the FWC to a gain of 0.2%. The August decline for the FWC was the worst monthly performance since May 2012.
EquNev-K1T Capital Hedge Fund performed better than most of the markets. The fund returned a positive return of 3.24% to the investors in August while the benchmark US S&P was -6.02%. It’s worth noting that almost all systematic hedge funds lost money in August 2015, including: Renaissance -5.71%, Winton -4.3%, Brevin Howard -3.03% and Cantab -10.36%. EquNev-K1T Capital is a 100% systematic hedge fund trading in the largest 900 companies listed on the US stock market (the SP900). The Fund’s premise is the existence of short term cycles (about two weeks) in US stock prices. This means that the Fund always buy and hold stocks for about one week. The net risk for the Equnev-K1T never exceeds 2.5x AUM and we have a long bias (although we do occasionally have net short positions).
The Indian bourses performed no better. S&P NIFTY index fell over 12.44% in August on account of the rub off of the Chinese stock market crisis. Moreover, on account of sustained capital outflows by foreign funds and a sudden spike in crude oil prices globally in August, the Indian Rupee depreciated to United States Dollar by Rupees 2.34, a fall of over 3.65% during a single month. Kapil Khandelwal, Director EquNev Capital and Board Member, EquNev-K1T reaffirmed, “These are what hedge funds are expected to do. Protect the investors against massive, “fat tail” days like what August witnessed; instead these funds merely ride the beta train with the most leverage possible, hoping that the stock market regulators will prevent any events that actually need hedging, and blow up in a fiery crash any time the market tumbles. The EquNev-K1T Capital strategy provided the Indian investors with a risk diversification, portfolio allocation and a natural hedge against the Indian Rupee depreciation as an alternative asset with minimal risks. This becomes a right time to enter and reallocate investments through the Liberated Remittance Scheme (LRS)”
In the first few weeks of August falling crude oil prices were troubling the energy stocks in the US stock market. At that time EquNev-K1T Capital systematically purchased energy stocks and hedged them against the broad market. In the third week of August, Shanghai stocks were seen as the trigger for steep declines in the broad US market, when just a few days earlier the SP500 had been challenging it’s all-time highs. EquNev-K1T Capital’s response to this broad market weakness was to cautiously and systematically buy US stocks. This proved the correct approach as global stocks roared back in the last week of August. As CEO Simon Wajcenberg noted “Our approach to stock selection and asset allocation meant that the August market turmoil was just another day at the office for EquNev-K1T Capital”
Corporate Comm India (CCI Newswire)
