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Hedge funds were up for the eighth consecutive month in February amid healthy upward movement in
1
most markets. The î
 
  gained 1.09% during the month, bringing its
year-to-date return figure to 1.27%. Market sentiment was buoyant through most of the month,
leading to rallies in underlying markets± the MSCI World Index was up 2.75% in February.

Among the regional mandates, the best performance was delivered by Japanese hedge funds,
gaining 2.62% in February. Japanese hedge funds investing in financial and insurance stocks, as well
as material and mining companies, posted healthy gains± the Nikkei 225 was up 3.77% during the
month. Returns from European hedge funds were also positive in February, up 0.55%, while Eastern
Europe & Russia-investing funds gained 1.22%. Asia ex-Japan hedge funds witnessed losses to the
tune of 1.32% amid declines in underlying markets ± the MSCI Asia Pacific ex Japan Index was down
2.36%.

Most other hedge funds also delivered positive returns, with North American hedge funds gaining
2.16% in February. The S&P 500 was up 3.20% in the month, reaching a 32-month high in the third
week of the month before declining slightly near the month-end due to heightened geopolitical
tensions. Increased risk appetite during the first three weeks led to a sustained rally in the equity
markets as better-than-expected corporate earnings and increasingly positive outlook on the global
economy lifted market sentiment. North American managers in the merger & acquisition space also
took advantage of healthy corporate activity. February was marked by a number of strategic
takeovers, leveraged buyouts and spin-off announcements, with a number of funds benefitting from
deals in the pharmaceutical sector such as Sanofi-Aventis¶s acquisition of Genzyme and the Danaher-
Beckman deal. February was the sixth consecutive month of positive returns for North American
managers, with the î
 
 
 
  gaining 14.60% since
September 2010.


 
 
 





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1
Based on 63.04% of funds which have reported February 2011 as at 15 March 2011.
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North American and Japanese hedge funds lead the way in the year-to-date return measure with
returns of 3.12% and 3.73%, respectively. Investors are starting to look at«

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