Eqira’s factor-based projections estimate that hedge funds collectively dropped 0.38% last week as losses in equity markets dragged down returns. Their year-to-date total return now stands at 2.46%.
Risk assets performed poorly as oil-related securities continued to plummet. September WTI crude oil futures fell 6.9%, prolonging their recent slide. They are down 27.6% since June 24, forcing the entire energy complex into a tailspin. Energy equities dropped 3.3% and now find themselves down 15.2% for the year. MLPs, typically less volatile than equities because of their steadier cash flows, bucked their normal behavior and declined a sizeable 8.9%, quickly approaching a 20% decline for the year.
Our US Utilities index was our only equity benchmark to finish the week in positive territory. While foreign developed equities managed to eke out smaller losses than their American cousins, emerging market equities were not so fortunate, losing 1.36% in aggregate. Latin American equities fared particularly poorly, giving up 3.95%.
Longer dated US Treasuries and investment grade bonds served as safe havens, gaining modestly. They were two of a very limited number of places to hide from market declines.
Our US 60/40 and risk parity indexes lost 0.73% and 0.78% for the week, respectively. The global versions fared even worse with the 60/40 index sagging 0.78% and the risk parity index slumping 1.29%.