Hedge Funds Dramatically Outperform Equity Markets Despite Losses

by Carla Johnson, InvestorsOffshore.com, London

13 October 2008

Hedge funds as measured by both the Greenwich Global Hedge Fund Index ("GGHFI") and the Greenwich Composite Investable Index ("GI2") significantly outperformed global equity indices despite posting their greatest losses since August 1998 during the month of September.

The GGHFI and GI2 posted declines of -4.85% and -5.87% on the month, respectively, compared to global equity returns of -8.91% for the S&P 500, -12.08% for the MSCI World Equity Index, and -13.02% for the FTSE 100.

Year-to-date, the GGHFI and the GI2 have shed -8.85% and -8.82%, respectively, against -19.29% for the S&P 500, -25.59% for the MSCI World Equity Index and -24.07% for the FTSE 100.

Said Greenwich Alternative Investments CEO, Thomas Whelan: "It was a perfect storm for both credit/equity markets and hedge funds in September. The already deflated values of financial firms provided the perfect trap for value investors while government intervention limited the ability of hedge funds to effectively mitigate their risk. Simultaneously, the continued freezing of credit markets combined with investor redemptions forced fixed-income funds to liquidate or otherwise mark down assets at depressed prices. The results of the market turmoil and unpredictable regulatory environment are evident in their returns this month."

Not surprisingly, Short Selling funds bucked the general trend, advancing +9.27% on average. Year-to-date, Short Selling funds have gained 17% and remain the best performing subsector of hedge fund strategies.

Greenwich Alternative Investments, LLC (and its affiliates), based in Stamford, Connecticut, manages one of the world's largest hedge fund databases and is among the oldest providers of hedge fund indices, asset management services, and research to institutional investors worldwide.

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