Deutsche Bank said the median hedge fund saw losses of 1.04% in June, reducing global median performance to 3.80% by the end of the month. The bank said distressed funds and equity long/short strategies performed strongly, generating year-to-date returns of 8.72% and 6.02% respectively.
Deutsche Bank said Japanese long/short strategies had also posted strong performance, with year to date returns of 16.71% YTD.
However, it also noted that the dispersion of returns across funds was high with the 75th percentile gaining .35%, versus negative returns of -2.61% in the 25th percentile.
In terms of investor sentiment, Deutsche said meetings its Hedge Fund Capital Group had carried out with investors found a mix of opportunistic, macro and market neutral strategy allocations and investors taking a bottom-up market perspective.
Deutsche found short selling interest continued to target individual companies rather than sectors, with BlackBerry manufacturer Research In Motion and mining firm Molycorp Inc among the most borrowed stocks.
It also noted that the borrowing of Japanese equities had risen, despite a falling Nikkei, and increasing number of investors had targeted Chinese, citing concerns over shadow banking transparency, non-performing loans and rising systemic risk.
The Bank also noted that the introduction of the Alternative Investment Fund Managers (AIFM) directive would have a major impact on hedge fund depository functions.