Hedge Funds Edge Slightly Higher In June

by Phillip Morton, Investors Offshore.com

17 July 2009

Hedge funds as measured by the Greenwich Global Hedge Fund Index showed mixed results during the month of June but managed to extract a positive return in unpredictable markets.

The GGHFI returned +0.19% while the Greenwich Composite Investable Index gained +0.45% during the month, compared to global equity returns in the S&P 500 Total Return +0.20%, MSCI World Equity -0.61%, and FTSE 100 -3.82% equity indices. Year-to-date, the GGHFI and the GI2 have returned +9.12% and -0.48%, respectively, while the S&P 500 Total Return, MSCI World Equity, and FTSE 100 Indices have returned +3.16%, +4.76%, and -4.17%, correspondingly. 54% of constituent funds in the GGHFI ended the month with gains.

“Most hedge fund strategy groups managed to squeeze out small gains during the month of June with the exception of Directional Trading managers. Arbitrage and Event-Driven funds demonstrated the strongest relative performance in choppy debt and equity markets during the month,” writes Clint Binkley, Senior Vice President.

Market Neutral funds were the best performing strategy group in June, with both Event-Driven and Arbitrage strategies gaining +1.42% and +0.89%, respectively. Convertible Arbitrage funds continued their strong 2009 performance by gaining another +1.87%. Merger Arbitrage funds and other Special Situations managers were the best Event-Driven funds, advancing +1.10% and +1.95%, respectively. Equity Market Neutral managers were the only group of Market Neutral funds to lose ground on the month, falling a modest -0.05%.

Directional Trading funds continued to lag behind their other hedge fund counterparts in the month of June, losing -1.30%. Trend-following Futures managers struggled in uncertain equity and commodity markets, declining by -1.64%. Macro funds also lost -0.52% as managers sought direction from mixed economic signals. Market Timing funds earned a modest return of 0.39%.

Long/Short Equity managers posted mixed results but on average gained a respectable +0.45%. Value funds gained slightly more than Growth funds during the month, with both strategies advancing by +0.70% and +0.31%, respectively. Opportunistic and Short Selling funds both produced nearly flat returns of -0.13% and +0.22%. Year-to-date, Long/Short hedge funds have outperformed the S+P 500 Index by more than 7%.

Finally, Specialty Strategy managers also advanced marginally during the month of June and remain the best performing group of hedge fund managers year-to-date. Fixed Income funds in particular had a strong month, gaining +1.96%. Emerging Market and Multi-Strategy funds essentially came in flat on the month, returning +0.20% and -0.13%, respectively.

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