Greenwich-Van Hedge Fund Index Almost Flat In February

Investors Offshore.com

20 March 2006

The Greenwich-Van Global Hedge Fund Index (the “Index”) gained +0.09% in February (3.46% YTD), according to hedge fund index provider Greenwich-Van Advisors, LLC. In comparison, the S&P 500 and the Lehman Brothers Aggregate Bond Index returned +0.27% (2.93% YTD) and +0.33% (0.34% YTD), respectively in February.

“Hedge fund returns in aggregate were flat due to mixed economic data which gave little direction to the stock and bond markets in February,” notes Wade McKnight, Vice President of Greenwich-Van. “February mostly represented a consolidation of the events begun in the very busy first four weeks of the year. US monetary policy continues to be the key focus for world bourses.”

The Index included 856 funds. Approximately 60% of the funds reported a positive return. Final Index returns will be calculated and posted at www.vanhedge.com at the end of March, after additional funds have submitted returns.

Greenwich-Van reports in detail as follows:

'Despite the modest 0.09% return for the Greenwich-Van Global Hedge Fund Index, most strategies had a more favorable month, but futures managers disproportionately impacted the aggregate Index return. The Directional Trading Group, comprising futures, market timing and macro oriented hedge fund strategies, lost -1.85% in February. The Greenwich-Van Global Futures Index, which returned -2.37%, produced the greatest loss of all Greenwich-Van Indices. This return was broadly affected by managers who made strong bets on commodities, namely the energy complex, throughout the month. The Market Timing and Macro indices returned -1.02% and -0.50%, respectively.

'The Specialty Strategies Group led the four Greenwich-Van Strategy Groups yielding 0.75% in February. Emerging Markets, a strategy that invests in areas such as China, Latin America, and Russia, generated the strongest result with a 0.99% net return. A Financial Times article reported that in January 2006, global net inflows into emerging market equities were $11.4bn – more than half of last year's total in a single month. In the first week of February, the figure was a new weekly record $3.3bn. The net flow into emerging market bond funds last year was $10.1bn. This appetite for emerging market paper has been driven by a dramatic rise in global liquidity, which has created an ample supply of money to chase higher yields. The Greenwich-Van Global Income and Multi-strategy indices gained 0.61% and 0.52%, respectively.

'The Market Neutral Group yielded 0.73% in February. After trading sideways for much of February, the distressed and high yield markets recorded a 0.67% return, as measured by the Lehman High Yield Credit Bond Index, due to income rather than price appreciation. On average high yield spreads edged tighter as the ten-year Treasury slipped, sending its yield higher. Primary market activity cooled after January’s sizzling pace, with total deal volume ending the month down more than 30% year over year. The lack of supply forced investors to put cash balances to work in the secondary market. The Greenwich-Van Market Neutral Arbitrage, Event Driven and Equity Market Neutral Indices returned 0.91%, 0.58% and 0.43%, respectively.

'The Long/Short Equity Group returned 0.27% in February. February was a choppy month for equities, as most indices were flat following the January market rally. Nevertheless, the economy continues to be resilient. The labor market is very robust with an unemployment rate below 5%. Oil prices have dropped below January’s peak in the high $60s. The housing market has continued to gradually soften. Meanwhile, most forecasters anticipate a bounce back in economic growth in the first quarter stimulated by solid business and consumer spending. Greenwich-Van’s Global Aggressive Growth, Opportunistic, Value and Short Selling Indices returned 0.49%, 0.23%, 0.22% and 0.11%, respectively.'

Greenwich-Van Advisors, LLC manages one of the world's largest hedge fund databases and is among the oldest providers of hedge fund indices and research to institutional investors worldwide. The firm warns that accuracy of compiled information reported by managers is not audited or independently verified and may not represent all hedge funds. Greenwich-Van does not necessarily perform due diligence on reporting managers. Hedge fund returns are net of underlying fees and performance allocations. Timing of fee and performance allocations may affect the reported performance. Averages are equal-weighted. Past results are not indicative of future performance.

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