Greenwich Hedge Fund Index Begins 2009 On Positive Note

by Phillip Morton, Investors Offshore.com

24 February 2009

Hedge funds as measured by both the Greenwich Global Hedge Fund Index (GGHFI) and the Greenwich Composite Investable Index (GI2) withstood falling equity markets during the month of January to begin 2009 with gains.

The GGHFI and GI2 returned 0.42% and 0.10% during the month, respectively, compared to global equity returns in the S&P 500 Total Return (- 8.43%), MSCI World Equity (-8.85%), and FTSE 100 (-6.42%). 59% of constituent funds in the GGHFI ended the month with gains.

"January was an excellent start to 2009 for hedge funds despite a challenging environment in most equity markets. Three of four hedge fund strategy groups ended the month with gains while global bourses on average shed 6-10%. The value of hedge funds in mitigating severe losses has never more evident than in the start of 2009," notes Margaret Gilbert, Managing Director of Greenwich Alternative Investments, which compiles one of the oldest hedge fund performance benchmarks.

Market Neutral funds were the best performing group of managers in January, with funds gaining 1.85% on average and all sub-strategies showing positive returns. The results of managers trading in debt instruments were encouraging for the sector as most managers turned in strong gains. Convertible and Fixed Income Arbitrage managers advanced 5.41% and 2.33%. Event Driven managers also contributed to hedge fund gains, netting 1.44% on average. The best performing sub-group among these managers was Special Situation funds, netting 2.34%. Equity Market Neutral managers also managed to advance despite volatile equity markets, gaining 1.63%.

Long/Short Equity managers were essentially flat on the month despite volatile and falling equity markets, dropping 0.10%. Value and Opportunistic funds were both slightly positive on the month, returning 0.15% and 0.48%, respectively. Growth managers in contrast, lost 0.98% on average. Short sellers were the best performing group of long/short funds due to declining equity markets, gaining 1.53%.

Directional Trading funds also began 2009 on a positive note, gaining 0.18%. Macro and Market Timing funds advanced with returns of 0.98% and 2.04%, respectively. Futures managers, one of the strongest performing sub-strategies of 2008, declined 0.14%.

Finally, Specialty Strategy managers posted mixed results but ended the month with a gain of 0.42% on average. Emerging Market funds declined marginally, losing 1.46% while Fixed Income and Multi-Strategy managers advanced 2.61% and 1.42%, respectively.

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