In several of our previous posts, we have noted how the hedge funds have been performing on the basis of different strategies. Commodity trading advisers have come off as a consistent lagger in the past couple of months. Natixis SA (EPA:KN) overview of hedge fund performance for the month of October 2012 is also listing CTA as one of the worst performers of all hedge fund strategies. For the year, the top three performers are all fixed income hedge funds.

naxtis hedge fund performance by type for 2012

Lyxor’s analysis of hedge fund returns notes the same, where the highest return of 2.96 percent has been generated YTD by QIM Fund Ltd, a fund based on CTA strategy. Other CTA funds like Winton Capital were down -5.85 percent at the first two weeks of November. Famous names, like Brevan Howard, are down -7.5 percent, whereas Tudor Momentum was down -7.61 percent.

hedge funds performance 2003-2012 naxtis

If we look at the monthly returns for October then the only positive return of 1.39 percent was reported by NuWave Combined Futures. All other CTA funds followed by Lyxor’s Managed Account Platform were down, with Lynx Fund and Tudor Momentum losing as much as 6.2 percent and 5.97 percent in a single month.

In the respect to hedge funds’ performance for October, Natixis SA (EPA:KN) has noted the same. CTA were down with a 4.6 percent loss, which corresponds to the GSCI Commodity index losing 4.1 percent in the same period. Global Macro strategy also lost 0.7 percent in October. In the year of 2012, CTA was among the worst three performers for six out of the ten months. It gained the most in July 2012 and was among the top three in April and June as well.

The best performing strategy in October were the distressed and event driven funds, where the index for each strategy rose by 0.9 percent and 1 percent respectively. Fixed Income arbitrage and High yield strategies were also up by 0.9 and 0.8 percent. US High yield has outperformed S&P 500 (INDEX.INX) in the last month. Some of the best performing event driven and risk arbitrage funds have been JANA Partners and GLG Credit Opportunity Fund.

The market rally ended before October and the market movers for last month were uncertainties around US elections and Europe’s expanding debt crisis.  Going forward, the US fiscal cliff and European slowdown will restrict profits from long equity positions.