CHICAGO, Oct. 21 /PRNewswire/ -- Morningstar, Inc.
(Nasdaq: MORN), a leading provider of independent investment
research, today reported preliminary hedge fund performance for
September 2010 and asset flows
through August. September closed out a profitable quarter for hedge
funds. The Morningstar 1000 Hedge Fund Index rose 5.2% in September
and 7.6% over the third quarter, while the currency-hedged
Morningstar MSCI Composite Index climbed 2.8% for the month and
4.3% for quarter.
"Hedge funds ended the third quarter with a bang," said
Nadia Papagiannis, alternative
investment strategist for Morningstar. "All strategies profited, as
equities, bonds, commodities, and currencies rallied."
U.S. stocks, as measured by the S&P 500 Index, experienced
their best September in 71 years, on the news of more potential
easing by the Federal Reserve and better than expected economic
data with payrolls and manufacturing. The Morningstar U.S. Equity
Hedge Fund Index rose 6.0% in September against the S&P 500's
8.9% climb. European stocks, as measured by the MSCI Europe NR
Index, increased 11.0%, as positive GDP and sentiment data
outweighed credit concerns over Ireland and Portugal. The Morningstar Europe Equity Hedge
Fund Index rose 7.8% during the month.
In mid September, the Federal Reserve's statements suggesting
continued quantitative easing triggered a U.S. dollar freefall
against several currencies and near-record lows in two- and
five-year Treasury yields. This provided trading opportunities for
funds in Morningstar's Debt Arbitrage and Global Non Trend Hedge
Fund Indexes, which gained 3.6% and 4.0%, respectively in
September, and 6.6% and 4.6% for the quarter. The U.S. dollar's
plunge contributed to the rise in several commodities, including
gold, silver, sugar, and cotton. Funds in Morningstar's Global
Trend Hedge Fund Index, which profit from price trends in commodity
futures and other derivatives, saw a 6.1% rise in September, their
best month since early 2008.
Hedge fund of funds in the Morningstar's database also posted
their best results since 2008. The Morningstar Hedge Fund of Funds
Index outpaced the Morningstar Multi-Strategy Hedge fund index by
almost a full percentage point in the third quarter of 2010, after
having underperformed in the previous six quarters.
Merger and acquisition activity picked up in the third quarter
of 2010, particularly in emerging markets and the energy sector.
Funds in the Morningstar Corporate Action Hedge Fund Index, which
engage in strategies such as merger arbitrage, rose 4.3%.
Acquisition activity through leveraged buyouts helped to spur new
corporate high-yield debt issuance, which almost broke 2009's
year-long record this month. The appetite for high-yield bonds and
risky assets in general boded well for funds in Morningstar's
Distressed Securities Hedge Fund Index, which increased 2.6% in
September. Volume in convertible bond issuance also improved in the
third quarter, especially in Asia.
The Morningstar Convertible Arbitrage Hedge Fund Index climbed 7.4%
in the three months ending September
30.
In addition to a favorable market environment in September,
hedge funds also appear to be back in favor with investors. After
two months of net outflows, single-manager hedge funds in
Morningstar's database saw $1.3
billion in inflows in August. Convertible arbitrage hedge
funds attracted the most assets in August, $773 million. For the year to date through
August, hedge funds in the database have leaked $4.4 billion, although funds in the Global
Non-trend, U.S. Equity, and Corporate Actions categories
experienced inflows of $3.3 billion,
$1.4 billion, and $1.2 billion, respectively.
September returns for the Morningstar Hedge Fund Indexes are
based on funds that reported as of October
18, 2010. September returns for the Morningstar MSCI Hedge
Fund Indexes and August asset flows are based on funds that
reported as of October 13, 2010.
Hedge fund investors, managers, consultants, and advisors can
access additional information through the MorningstarĀ® Alternative
Investment Center(SM), formerly MorningstarĀ® Altvest(SM), the
company's research platform designed specifically for hedge funds,
or Morningstar Direct(SM), the company's global research platform
for institutions.
Morningstar has approximately 11,000 hedge funds and funds of
hedge funds in its database. The Morningstar 1000 Hedge Fund Index,
a global, broadly representative benchmark for hedge fund
performance, has return history from January
2003. The index comprises the top 90% of eligible assets in
Morningstar's hedge fund database. For the purposes of the index,
Morningstar counts funds with shared portfolios as a single hedge
fund; funds of hedge funds are excluded from consideration. The
index is updated daily for the previous month-end, rebalanced
monthly, and reconstituted semi-annually. In addition, Morningstar
has 17 category indexes and four broad category indexes based on
Morningstar's strategy-specific classification system for hedge
funds. Morningstar's hedge fund indexes are not investable.
In addition to calculating the Morningstar Hedge Fund Indexes,
Morningstar also calculates hedge fund indexes by applying the MSCI
Hedge Fund Index Methodology and Hedge Fund Classification Standard
to Morningstar's hedge fund database. These indexes demonstrate the
performance of hedge funds to investors who have hedged their
currency exposure back into U.S. dollars. The MSCI Hedge Fund Index
Methodology classifies hedge funds by investment process,
geography, and asset class.
This release is not intended to be an offer or solicitation for
the sale of hedge funds. The information is not warranted to be
accurate, complete, or timely. When considering hedge funds,
investors should consider various risks, including the fact that
some products engage in leveraging and other speculative investment
practices that may increase the risk of investment loss, can be
illiquid, are not required to provide periodic pricing or valuation
information to investors, may involve complex tax structures and
delays in distributing important tax information, are not subject
to the same regulatory requirements as mutual funds, often charge
high fees, and in many cases the underlying investments are not
transparent and are known only to the investment manager. The high
degree of leverage that is often obtainable in trading can lead to
large losses as well as gains. Neither Morningstar nor its content
providers are responsible for any damages or losses arising from
any use of this information. Past performance is no guarantee of
future results.
About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent
investment research in North
America, Europe,
Australia, and Asia. The company offers an extensive line of
Internet, software, and print-based products and services for
individuals, financial advisors, and institutions. Morningstar
provides data on approximately 360,000 investment offerings,
including stocks, mutual funds, and similar vehicles, along with
real-time global market data on more than 4 million equities,
indexes, futures, options, commodities, and precious metals, in
addition to foreign exchange and Treasury markets. The company has
operations in 21 countries.
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Morningstar Hedge Fund Index
Performance
|
Sept.
2010
|
Q3
|
YTD Through
Sept.
|
|
Morningstar 1000 HF
USD
|
5.17
|
7.57
|
5.11
|
|
Morningstar Hedge Fund of
Funds
|
4.78
|
7.37
|
1.94
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Morningstar Hedge Fund Category
Indexes
|
|
|
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|
Morningstar Convtbl Arbitrage HF
USD
|
2.77
|
7.37
|
5.18
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|
Morningstar Corporate Actions HF
USD
|
4.25
|
6.27
|
10.50
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Morningstar Debt Arbitrage HF
USD
|
3.61
|
6.56
|
8.78
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|
Morningstar Distressed Sec HF
USD
|
2.57
|
4.67
|
17.51
|
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Morningstar Dvlp Asia Equity HF
USD
|
5.89
|
7.36
|
5.23
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Morningstar EM Equity HF
USD
|
6.83
|
11.23
|
6.41
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Morningstar Equity Arbitrage HF
USD
|
3.18
|
4.81
|
0.22
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Morningstar Europe Equity HF
USD
|
7.80
|
11.33
|
1.02
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Morningstar Global Debt HF
USD
|
1.40
|
4.25
|
6.22
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|
Morningstar Global Equity HF
USD
|
7.85
|
9.45
|
4.07
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Morningstar Global Non Trend HF
PUSD
|
3.99
|
4.55
|
2.80
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Morningstar Global Trend HF
USD
|
6.12
|
9.33
|
6.14
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Morningstar Multi-Strategy HF
USD
|
3.79
|
5.87
|
3.00
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Morningstar Short Equity HF
PUSD
|
5.08
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7.27
|
2.85
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Morningstar US Equity HF
USD
|
5.97
|
6.21
|
5.41
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Morningstar US Small Cap Eqty HF
USD
|
6.34
|
6.31
|
2.55
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Morningstar Hedge Fund Indexes
with MSCI
|
|
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Morningstar MSCI Composite
AW
|
2.75
|
4.32
|
5.19
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|
Morningstar MSCI Composite
EW
|
3.65
|
5.24
|
5.02
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Morningstar MSCI Composite Core
Funds
|
3.23
|
4.85
|
4.87
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Morningstar MSCI Composite Small
Fund
|
3.94
|
5.44
|
4.92
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Morningstar MSCI Developed
Markets
|
3.45
|
4.52
|
4.65
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Morningstar MSCI Directional
Trading
|
3.31
|
5.03
|
4.18
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Morningstar MSCI Emerging
Markets
|
4.57
|
8.38
|
8.22
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Morningstar MSCI
Europe
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2.97
|
3.66
|
4.03
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Morningstar MSCI Global
Markets
|
3.55
|
5.42
|
5.01
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Morningstar MSCI
Japan
|
0.86
|
-2.69
|
-3.77
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Morningstar MSCI Multi-Process
Group
|
3.65
|
5.14
|
5.71
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Morningstar MSCI Merger
Arbitrage
|
0.98
|
3.17
|
4.94
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Morningstar MSCI North
America
|
3.60
|
4.75
|
5.34
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Morningstar MSCI Relative
Value
|
1.72
|
3.86
|
5.71
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Morningstar MSCI Security
Selection
|
4.71
|
5.91
|
4.44
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Morningstar MSCI Specialist
Credit
|
1.61
|
3.92
|
8.84
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Market Indexes
|
|
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MSCI EM NR USD
|
11.11
|
18.03
|
10.75
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MSCI Europe NR USD
|
10.99
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19.35
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-0.60
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Russell 2000 TR USD
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12.46
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11.29
|
9.12
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S&P 500 TR
|
8.92
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11.29
|
3.89
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BarCap Global Aggregate TR
USD
|
2.35
|
7.30
|
6.96
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DJ UBS Commodity TR
USD
|
7.26
|
11.61
|
0.90
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Est. Hedge Fund Flows By
Morningstar Category
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Aug. 2010 Flows
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YTD Through
Aug.
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Convertible Arbitrage
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772,686,279
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315,860,984
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Corporate Actions
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(813,073,764)
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1,196,854,578
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Debt Arbitrage
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183,927,906
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(497,813,751)
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Developed Asia Equity
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(104,401,653)
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(537,338,287)
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Distressed Securities
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(102,452,163)
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(573,384,585)
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Emerging Market
Equity
|
153,127,233
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(143,731,863)
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Equity Arbitrage
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(38,128,666)
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(744,143,120)
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Europe Equity
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(76,954,088)
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(975,115,139)
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Global Debt
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(48,200,086)
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(1,478,133,171)
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Global Equity
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(67,289,198)
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(1,341,533,546)
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Global Non-Trend
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581,686,116
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3,275,441,555
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Global Trend
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287,507,399
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(1,216,337,925)
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Multi-strategy
|
207,364,040
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(2,803,672,704)
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Short Equity
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(3,482)
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12,885,536
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U.S. Equity
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432,457,439
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1,373,689,355
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U.S. Small Cap Equity
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(98,909,734)
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(239,110,456)
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TOTAL SINGLE-STRATEGY HEDGE FUND
FLOWS
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1,269,343,578
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(4,375,582,539)
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Est. Flows by Morningstar
Rating
|
|
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1-star
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(136,263,325)
|
(418,721,549)
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2-star
|
9,967,022
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(2,799,054,210)
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3-star
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475,469,100
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(5,351,372,507)
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4-star
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238,133,845
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1,652,205,102
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5-star
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517,931,257
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1,216,246,122
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No Rating
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164,105,679
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1,325,114,503
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TOTAL SINGLE-STRATEGY HEDGE FUND
FLOWS
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1,269,343,578
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(4,375,582,539)
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Ā©2010 Morningstar, Inc. All rights reserved.
MORN-R
Media Contact:
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Alexa Auerbach, 312-696-6481
or alexa.auerbach@morningstar.com
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SOURCE Morningstar, Inc.
Copyright . 21 PR Newswire