August was an interesting month for the global hedge fund industry with a variety of funds gaining and losing double digits around the 24th: Black Monday. An unforeseen spike in volatility with levels in the VIX not seen since 2008 and liquidity in certain asset classes at surprisingly low level. Seemingly liquid alternative assets like ETFs with underlyings in less liquid segments like fixed income and high yield showed incredible price volatility and demonstrated investors demands for hedge funds participating in downward markets. China equity markets dropped sharply in August, which led the FED and BOE to postpone expected rate increases and let to liquidity injections by the PBOC and further devaluation of the Renminbi in order to stabilise the market. Despite the market volatility hedge fund AuM stayed close to record levels of $3.035 trillion with the biggest demand in event driven and catalyst equity, direct lending and structured credit, discretionary global macro and systematic CTA strategies which produce alpha under volatility and are non-correlated to traditional equity and fixed income sectors.
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