Although our total index for August is again negative, it lost with 0.92 per cent less than anticipated.

The index for hedgefunds lost 0,76 per cent in August. A positive development is that almost half of all hedgefunds had a positive return this month.

This brings the YTD Index to minus 4,28 per cent.

While these results are not satisfying for an industry that aims to achieve high absolute returns in all market environments, hedge funds have done relatively well compared to other asset classes. The S&P 500 was down by 12.64 per cent for 2008 at the end of August and currently stands at minus 25 per cent (09/29).

While some strategies have proven to be unsuitable in the current environment, others were hit by unforeseeable regulatory changes.

Shifting of assets to other counterparties and closing of positions due to counterparty-risks has also had a negative effect on some funds.

Outlook September:
Hedgefunds, like all other asset classes, still suffer from deleveraging and heightened risk-aversion. After the collapse of Lehman, with $40bn of fund assets still frozen in its prime brokerage arm, counterparty-risk has come into the limelight. Morgan Stanley reportedly lost almost a third of all assets in its prime broker division. A further reduction of open positions -forced or planned- will put more downward pressure on many assets.

Many managers also reported large redemption requests in September for the year end. With more bad news every day and banks in need of additional financing it is understandable from an investor's point of view to head for the exit. As long as uncertainty prevails in these unprecedented times, hedge fund returns will remain depressed.

However, we anticipate that in the future hedge funds will emerge as the possible winner of the current market turmoil due to lowered earnings potential in other asset classes.