Hedge Funds Continued Gains In September

by Phillip Morton, Investors Offshore.com

10 October 2005

Hedge fund returns as measured by the Van Global Hedge Fund Index averaged 1.5% in September, marking the fifth consecutive month of positive hedge fund performance.

"As was the case in August, positive returns were seen across all strategies and sub-strategies," notes Kevin Campbell, Vice President of Van Money Manager Research, LLC.

Campbell revealed that the strongest performance was achieved by managers in the emerging markets sector who capitalised on a surge in equity prices in Eastern European and Latin American markets.

Macro managers also performed well, noted Mr Campbell, while rising energy prices and interest rates coupled with the volatility resulting from hurricanes Katrina and Rita provided managers in this strategy with attractive investment opportunities, he said.

For comparison purposes, last month, the S&P 500 gained 0.8%, the Morgan Stanley Capital International World Equity Index gained 2.5%, the Nikkei 225 gained 9.35% and the Dow Jones Europe Stoxx Index gained 2.1%. The Lehman Brothers Aggregate Bond Index lost 1.0%.

Meanwhile, Standard & Poor's has also reported a fifth consecutive gain in its Hedge Fund Index, albeit by a smaller margin of 0.97%, as all three major categories - Arbitrage, Directional/Tactical, and Event-Driven - recorded positive returns.

The S&P Arbitrage Index finished September with a gain of 0.52% with Fixed Income Arbitrage managers taking profits on short bond positions in the European and U.S. yield curves. The S&P Event-Driven Index climbed 1.08% during September based upon positive gains by all three of its underlying sectors.

However, it was the S&P Directional/Tactical Index was September's best performing sub- index rising 1.31% during the month as investors cashed in on rising global stock markets. Macro strategy managers also turned in a strong month, helped by their long exposure to equity, energy, and metals markets, S&P said.

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