Hedge funds fell 0.06 per cent in October, new figures show a day after a report stated that inflows and demand for talent had driven up the pay of managers.

Hedge funds fell 0.06 per cent in October, new figures show a day after a report stated (see here) that inflows and demand for talent had driven up the pay of managers.

Figures from eVestment said that the virtually flat monthly result for October masked a wide variation of returns among different strategies, the largest such spread in almost three years.

Managed futures funds, particularly the largest managers, benefited from recent global market volatility, eVestment said. Those managed futures funds managing over $1 billion are now among of the best performing segments of the industry in 2014, behind only India-focused funds.

Emerging market strategies were positive in October, with funds focused on India again benefiting from the country’s post-election surging equity markets. The India group of hedge funds has returned an average of nearly 55 per cent in 2014, far better than the next best emerging market exposure of Africa/Middle East at 7.9 per cent.

The figures highlight how inflows and assets under management at hedge funds don’t always match what has been a largely lukewarm average performance by the sector since the start of this year. According to Hedge Fund Research, the Chicago-based firm that tracks the sector worldwide, for example, its HFRI Fund Weighted Composite Index shows returns for the year to October of 3.00 per cent.

Among other details of its commentary, eVestment said that while “market volatility has increased over the last two months, systematic strategies have greatly outperformed funds whose positions and directional market exposures are fully at the discretion of managers”.

It also said that event-driven funds – such as those seeking to exploit price shifts caused by mergers and company announcements - are no longer among the industry leaders for 2014. Activist strategies led to the downside in October, and are in-line with the broad industry for the year.

Credit strategies produced the lowest aggregate returns of any market exposure in October, the universe’s second consecutive monthly decline. Credit strategies haven’t dropped for two straight months since the onset of Europe’s sovereign crisis in mid-2011, eVestment said.

Separately, Hedge Fund Research said its HFRI Fund Weighted Composite Index chalked up a gain of just 0.09 per cent in October from a month before.

Gains in macro, currency and equity hedge strategies offset losses in event driven and relative value arbitrage, reversing intra-month losses into month end.

HFR said a volatile October included significant declines in oil and energy prices, idiosyncratic losses in event equity positions, a sharp intra-month broad based equity market decline and partial recovery, a steep drop in US Treasury yields on investor risk aversion, and the conclusion of the US Federal Reserve quantitative easing measures concurrent with an increase in the Bank of Japan stimulus efforts.

Macro hedge funds, including both discretionary and quantitative trend following strategies, led industry gains for the month, HFR added.