After a dismal June, global equity markets staged a sharp rally in July. In the US, this was on the back of corporate earnings that improved substantially, bolstering equity markets. But hedge funds were in cautious mode as treasury rates and mortgage rates continued to decline amid a weakening economic outlook in July.
Federal Reserve chairman Ben Bernanke characterised the markets as being fraught with "unusual uncertainty," which is reflected in the flat performance of the InvestHedge Global Multi-Strategy median, which was only up 0.5%. Overall, it has been a tough three months, with only a handful of