Greenwich Charts Hedge Growth

by Phillip Morton, Investors Offshore.com

12 June 2009

Hedge funds as measured by the Greenwich Global Hedge Fund Index (GGHFI) surged during the month of May to extend their gains for 2009. The GGHFI returned 4.83% while the Greenwich Composite Investable Index (GI2) gained 1.94% during the month, compared to global equity returns in the S&P 500 Total Return 5.59%, MSCI World Equity 8.62%, and FTSE 100 4.11% equity indices. Year-to-date, the GGHFI and the GI2 have returned 8.65% and -0.79%, respectively, while the S&P 500 Total Return, MSCI World Equity, and FTSE 100 Indices have returned 2.95%, 5.41%, and -0.36%, correspondingly. 85% of constituent funds in the GGHFI ended the month with gains.

“All major hedge fund strategy groups moved decisively higher in the month of May. Hedge funds on average have now outpaced the S&P 500 on the year while mitigating the large market drawdowns experienced in January and February,” commented Clint Binkley, Senior Vice President at GreenwichAI.

Market Neutral funds profited greatly during May, with both Event Driven and Arbitrage strategies gaining 4.24% and 2.97%, respectively. Convertible Arbitrage funds secured their place as the top performing hedge fund sub strategy in May with a gain of 5.03%, bringing their total YTD return to 20.98%. Fixed Income Arbitrage managers also posted strong gains of 3.95%. Distressed funds and Special Situations managers managed to find profitable opportunities among a growing number of bankrupt and distressed companies. These funds moved higher by 4.39% and 6.03% on average, respectively. Merger Arbitrage funds also posted a modest gain of 0.75% during the month.

Long/Short Equity managers were the second best performing group of managers in May, pacing the gains in the S&P 500 on the month and advancing 5.80%. Growth-focused funds performed slightly better than Value managers (6.35% vs. 6.17%, respectively). Short selling funds declined for the second month in a row but managed to limit their losses to -2.22% on average.

Directional Trading funds rebounded from their lackluster performance in April to gain 3.05% in May. CTA/Futures managers posted their best month of 2009 to date, gaining 2.79%. Macro and Market Timing funds also enjoyed their best performance of the year, advancing 3.60% and 4.77%, respectively.

Finally, Specialty Strategy managers advanced strongly during the month of May, netting the largest gains of any strategy group. Emerging Market managers were especially profitable, gaining 10.39%. Fixed Income and Multi-Strategy managers also posted solid advances, gaining 4.40% and 4.62%.

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