May 11, 2011 - HFN Hedge Fund Industry Research Release

Investors Continued to Pour Money into Hedge Funds in April – Commodity

Strategies Performed Best

Hedge funds returned an average of 2.05% in April 2011 and the rate of net investor inflows
was again above the 2010 average.

Below are early estimates1 for April hedge fund performance and asset flows. A full report will be
available later in the month.

April Highlights:
• The equal weighted HFN Hedge Fund Aggregate Index was +2.05% in April 2011 and
+3.45% year-to-date (YTD). The S&P 500 Total Return Index (S&P) was +2.96% in April
and +9.06% in the first four months of 2011.
• Hedge fund assets increased an estimated 2.27% in April to $2.607 trillion. Investors added
a net $14.2 billion during the month for a core growth rate2 of 0.56%. This is a slight
increase from March and well above the average for 2010.
• Overall hedge fund industry performance was strong in April. Commodity strategies housed
the majority of above average returns. Commodity (non-FX), FX and financial futures
focused funds performed best posting +4.92%, +4.71% and +4.14% for the month,
respectively. Notably, these groups were generally flat coming out of Q1 2011.
• CTA/managed futures funds accounted for the ten highest Outlier ratios3 in April, an
indication that returns from many of these strategies were well outside their norms. Seven
of the ten highest ratios were FX focused strategies.
• Emerging markets strategies were mixed in April. Funds investing in the MENA region,
Brazil and China led the EM group. India funds continued to post losses, -0.47% in April
and -7.64% for 2011; Russia funds were the worst performing regional classification in
April, -3.59% and +2.24% YTD.
• Japan focused funds reported another down month at -1.28% pushing them into negative
territory, -0.96%, for the year.
• Equity slightly outperformed credit strategies during the month. Healthcare and financial
sector equity funds were among the top performers up +2.75% and +1.71% in April.
Mortgage strategies continued to post positive results, +1.52% in April and +7.15% YTD.
1 th
Early estimates are based on funds reporting April returns as of May 10 , 2011. Performance has a tendency to drift lower
as more funds report. Asset estimates may drift lower, but have not shown a consistent tendency to do so.
2
HFN defines core growth/decline as the % change in AUM due solely to net investor inflows.
3
The Outlier ratio was created by HFN to quickly measure if a fund’s monthly return meaningfully deviates from their
average return. It is calculated by dividing the difference between the current month’s return and the average monthly return
by the standard deviation of monthly returns.

HFN’s full April report, to be released in the third week of May, will provide details on high water
marks and asset flows by strategy and region.

April 2011 and YTD Benchmark Performance:

Emerging Market Benchmarks:
HFN Brazil Index: +2.44% in April, +3.56% YTD
HFN China Index: +0.71% in April, +0.89% YTD
HFN India Index: -0.47% in April, -7.64% YTD
HFN Russia Index: -3.59% in April, +2.24% YTD
HFN Latin America Index: +2.31% in April, +2.95% YTD
HFN Middle East/North Africa Index: +2.63% in April, -2.98% YTD
Emerging Markets Debt: +1.53% in April, +3.34% YTD
Emerging Markets Equity: +1.75% in April, +2.14% YTD
HFN Emerging Markets Index: +1.51% in April, +2.35% YTD
Broad and Developed Market Benchmarks:
HFN Asia Index: +0.64% in April, +0.10% YTD
HFN Europe Index: +1.13% in April, +2.24% YTD
HFN North America Index: +1.02% in April, +3.92% YTD
HFN Australia Index: +2.83% in April, +3.85% YTD
HFN Japan Index: -1.28% in April, -0.96% YTD
HFN US Index: +1.07% in April, +3.98% YTD

Fixed Income (FI) Strategies

All Fixed Income Strategies: +0.73% in April, +3.15% YTD
Corporate Bond Strategies: +1.18% in April, +4.46% YTD
Government Bond Strategies: -0.89% in April, -0.86% YTD
HFN Distressed Index: +1.15% in April, +4.52% YTD
HFN Mortgages Index: +1.52% in April, +7.15% YTD
HFN Fixed Income Arbitrage Index: +0.50% in April, +2.76% YTD

Equity (EQ) Strategies

All Equity Strategies: +1.28% in April, +2.88% YTD
HFN Long/Short Equity Index: +1.38% in April, +2.92% YTD
HFN Market Neutral Equity Index: +0.89% in April, +1.68% YTD
HFN Short Bias Index: -1.88% in April, -7.15% YTD
HFN Energy Sector Index: +0.25% in April, +5.56% YTD
HFN Healthcare Sector Index: +2.75% in April, +8.00% YTD
HFN Technology Sector Index: +1.10% in April, +4.97% YTD
Financials Equity Strategies: +1.71% in April, +2.84% YTD
Natural Resource Equity Strategies: +4.36% in April, +3.97% YTD
Real Estate Equity Strategies: +0.83% in April, +3.00% YTD

Commodity and Foreign Exchange (FX) Related Strategies

Foreign Exchange Strategies: +4.71% in April, +3.55% YTD
Financial Futures Strategies: +3.86% in April, +4.14% YTD
Commodity (Non-FX) Strategies: +4.92% in April, +5.27% YTD
HFN CTA/Managed Futures Index: +4.79% in April, +4.66% YTD

Past performance is not indicative of future returns

HFN Indices are based upon hedge fund performance as reported by hedge fund firms, their agents or other representatives. Performance has not
been independently verified by Channel Capital Group Inc. This email may not be reproduced or distributed except when authorized by
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and does not include a recommendation of any security. Nothing herein this report shall constitute tax or investment advice. Reasonable care has
been taken in compiling the information contained herein, however such information is dependent on the accuracy of reporting hedge funds and
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strategies and sectors, but does not contain a complete description of the risks associated with them. The views contained herein represent opinion
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