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In July, global financial markets posted strong gains – extending June gains – led by Technology and Energy as inflationary pressures eased and bank risks declined. Equities posted sharp gains led by Energy, Technology, AI, and Semiconductors; Italy, Turkey, and Hong Kong led regional gains. Interest rates were little changed as the yield curve inversion increased, with rising shorter-dated yields and falling longer-dated maturities. Oil surged to lead commodity gains as Silver, Copper, and Hogs also gained. The US Dollar declined against most currencies on falling inflationary pressures.
Hedge Funds posted gains in July led by Event Driven strategies, with the HFRX Global Hedge Fund Index gaining +0.52% for the month.
HFRX Event Driven Index gained +0.93% for the month from gains in Special Situations equity strategies and Merger Arbitrage managers. The HFRX Special Situations Index gained +0.94% from exposures to global catalyst-driven, fundamental value equities. The HFRX Merger Arbitrage Index gained +0.89% as global equities posted strong gains in July across geographies and sectors and activity in global M&A deals continued through the month.
HFRX Relative Value gained +0.90% for July led by gains in Convertible Arbitrage strategies and Multi-Strategy managers. The HFRX Convertible Arbitrage Index gained +1.38% for the month as volatility rose into month-end. The HFRX RV: Multi-Strategy Index gained +0.86% as the yield curve inversion increased as shorter-dated yields rose and longer-dated yields fell.
HFRX Equity Hedge Index gained +0.71% for the month from gains in Fundamental growth and Value strategies offset by declines in Market Neutral strategies. The HFRX Fundamental Growth Index gained +2.26% for the month from gains concentrated in small-cap US & European equities. The HFRX Fundamental Value Index posted a slight gain of +0.01% from gains in exposure to large-cap US & European equities. The HFRX Market Neutral Index declined -0.55% from declines in mean-reverting, factor-based strategies and fundamental value managers.
HFRX Macro/CTA index declined -1.05% for July led by declines in systematic trend-following managers. The HFRX Macro Systematic CTA Index declined -1.79% for the month as the US Dollar declined against most currencies on falling inflationary pressures. Oil led commodity gains followed by Sliver, Hogs, and Copper.

Comments reference performance figures as of July 31, 2023