Hedge Fund Data Suggests More Moderate Performance In February

by Phillip Morton, Investors Offshore.com

17 March 2004

Hedge fund performance data from the benchmark CSFB/Tremont fund index released this week has revealed a more modest performance in the hedge fund sector in February, although industry observers suggest that investors are likely to continue pouring money into alternative assets.

The figures show that hedge funds in the CSFB/Tremont index returned 1.40% in February, marginally down on January’s 1.7%. Year to date, hedge funds are up 3.13%.

"We are not disappointed with these returns," stated Robert Schulman, Co-Chief Executive Officer of Tremont Capital Management, adding that: "Despite anticipation of a slowing equity market, the long short equity sector posted solid returns for the month, and all ten sectors of the Index contributed with positive performance.”

“You don't want hedge funds to follow the stock market step by step and so hedge funds won't go through the roof and they also won't go into the cellar," he concluded.

The best performing strategy in February according to the data was managed futures, returning 6.89% for the month and 8.05% year to date. This was significantly higher than the next best performing strategy, equity long and short, which returned 1.75% for February and 3.78% year to date. Emerging markets returned 1.39% last month, and 3.96% year to date.

Schulman is of the view that these more modest returns are unlikely to deter investors from pouring money into hedge funds at a faster rate than ever. "The level of money that we are seeing come in suggests that another record will be set," he noted.

The fourth quarter of 2003 witnessed a record $26.8 billion inflow into the hedge fund sector.

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