Index Flash

Hedge funds deliver best returns in 16 months

12 October 2010

Hedge funds were positive for the third consecutive month in September,
up 3.45%, and ended Q3 on a high note amid increased risk appetite and
positive movements in underlying markets. The Eurekahedge Hedge Fund
Index advanced to a healthy 5.15% year-to-date return, after witnessing
its best September on record. The MSCI World Index also posted strong
gains of 6.75% for the month.

Below are the key highlights for the month:

• Hedge funds delivered the second best monthly performance

since May 2003, up 3.45% in September.

• Larger hedge funds (AuM>US$500 million) outperformed smaller

funds, up 6.35% YTD.

• All regions and strategies posted positive returns in September,

Greater China hedge funds gained 7.02% during the month.

Main Indices

Sep 2010 2010 YTD 2009

Index
Est1 Returns Returns
Eurekahedge Hedge Fund Index 3.45 5.15 19.44
Eurekahedge Fund of Funds Index 2.16 1.60 9.40
Eurekahedge Long-Only Absolute
5.94 8.39 46.84
Return Fund Index
Eurekahedge Islamic Fund Index 3.99 4.80 21.52

In terms of regional mandates, hedge funds investing in emerging

markets advanced strongly in September, with Asia ex-Japan managers
delivering the best performance – up 6.03%. The Eurekahedge Emerging
Markets Hedge Funds Index gained 4.20% as the MSCI Emerging
Markets Index surged 7.49%. Emerging markets have witnessed strong
flows of capital over the last few months, leading to rallies in the
underlying equity markets. Asia ex-Japan managers took advantage of
the hefty gains across the regional indices – the Hang Seng rose 8.87%,
the Sensex gained 11.67% while the Kospi, Shanghai Composite and the
Thailand SET also registered healthy returns. Eastern European managers
also posted excellent profits, gaining 3.90% on average and bringing
their year-to-date returns to 7.21%.

Managers investing in developed markets produced positive returns in

September, with North American managers leading the way. The

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 Index Flash

Hedge funds deliver best returns in 16 months

Eurekahedge North American Hedge Fund Index advanced 3.67% for the
month while European and Japanese managers gained 2.26% and
0.71%, respectively. The month was marked by increases in most asset
classes across geographies. Although the US dollar decreased during the
month, heightened risk appetite pushed the S&P 500 up 8.8% while
bonds also witnessed a rally in the latter half of the month amid
speculation of further quantitative easing by the US Federal Reserve.

Regional Indices

Sep 2010 2010 YTD 2009

Index
Est1 Returns Returns
Eurekahedge North American Hedge
3.67 5.72 22.96
Fund Index
Eurekahedge European Hedge Fund
2.26 3.82 19.68
Index
Eurekahedge Eastern Europe & Russia
3.90 7.21 59.49
Hedge Fund Index
Eurekahedge Japan Hedge Fund
0.71 0.57 6.78
Index
Eurekahedge Emerging Markets
4.20 6.60 35.35
Hedge Fund Index
Eurekahedge Asia ex-Japan Hedge
6.03 6.23 38.11
Fund Index
Eurekahedge Latin American Hedge
1.73 5.76 28.05
Fund Index

Strategy Indices

Sep 2010 2010 YTD 2009

Index
Est1 Returns Returns
Eurekahedge Arbitrage Hedge Fund
1.41 5.63 21.43
Index
Eurekahedge CTA/Managed Futures
3.20 5.18 2.79
Hedge Fund Index
Eurekahedge Distressed Debt Hedge
2.43 10.31 32.90
Fund Index
Eurekahedge Event Driven Hedge
3.84 7.96 38.17
Fund Index
Eurekahedge Fixed Income Hedge
1.28 7.80 21.56
Fund Index
Eurekahedge Long/Short Equities
4.33 3.88 23.67
Hedge Fund Index
Eurekahedge Macro Hedge Fund
3.68 5.73 13.07
Index
Eurekahedge Multi-Strategy Hedge
2.55 5.10 20.56
Fund Index
Eurekahedge Relative Value Hedge
2.20 7.55 22.32
Fund Index

Hedge funds of all strategic mandates finished the month with healthy
gains. Long/short equity funds delivered the best performance, gaining
4.33% on average, as managers were able to capture most of the upside
in the rising markets. Global macro funds and CTA/managed futures
funds also posted excellent returns of 3.68% and 3.20%, respectively, as
positive movements across most asset classes were profitable for
managers. Fixed income strategies also traded higher as increased risk
appetite helped distressed debt managers register yet another month of

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 Index Flash

Hedge funds deliver best returns in 16 months

excellent results while a month-end rally in bonds resulted in

opportunities for arbitrage, relative value and fixed income managers.
The Eurekahedge Distressed Debt Hedge Fund Index continued to lead in
the year-to-date measure, up 10.31% September year-to-date.

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www.eurekahedge.com
+65 6212 0925

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Based on 43.66% of the funds reporting the NAV for September 2010 as at 12 October 2010.

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