Hedge Fund Performance Pegged Back By Surging Oil Price, Says S&P

by Phillip Morton, Inverstors Offshore.com

10 August 2004

Standard & Poor’s has reported a 0.54% fall in its Hedge Fund Index for the month of July as two of the three sub-indices ended the month in negative territory against a backdrop of drifting markets and rising oil prices.

"Negative consumer and money center sector performance caused losses for some investment managers as it appeared that surging oil prices may take money out of consumers’ pockets," stated Justin Dew, the firm’s Senior Hedge Fund Specialist, as the S&P Event-Driven Index ended the month down 0.75%.

Also falling in July was the S&P Directional/Tactical Index, down 1.41% with losses in Equity Long/Short strategies noted as the major contributor to the negative return.

“Investor concern on the prospects for stocks in a rising oil and interest rate environment appeared to weigh heavily on the market,” observed Mr Drew, noting also that rising price of crude contributed to a 1.72% decline in the S&P Managed Futures Index.

The S&P Equity Long/Short Index also ended July lower, down 1.86% for the month.

However, the S&P Arbitrage Index rose 0.51% in July, as all three of its strategies ended in positive territory with Convertible Arbitrage as the best performer.

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