Hedge Funds Finish Third Quarter On A Positive Note

by Phillip Morton, Investors Offshore.com

21 October 2005

Hedge funds finished the third quarter of 2005 on a strong note according to hedge fund index provider Van Money Manager Research, LLC, which reported this week that the Van Global Hedge Fund Index gained 1.7% in September.

"For the second consecutive month, all twenty of VAN's individual hedge fund strategy and substrategy indices were positive, with Emerging Markets (+4.3%) the clear winner in September," noted Kevin Campbell, Vice President of VAN.

"This strategy has experienced a prolonged period of attractive returns, beginning in October 2002. Over the three-year period, the Van Global Emerging Markets Index increased by 90% and has experienced only six losing months. The second best performing strategy over this time period, Distressed Securities, increased by approximately 67%," Mr Campbell added.

During September, rising equity markets provided an attractive environment for Long/Short Equity funds, which gained 1.9% on average.

Meanwhile, funds with an Opportunistic investment style gained the most, 2.8% on average.

Despite rising equity prices, even managers with a dedicated short bias profited during the month, says VAN, averaging a 0.4% gain.

Higher energy prices and rising interest rates and the volatility stemming from hurricanes in the Gulf Coast region provided attractive investment opportunities for managers with a directional bias.

Convertible Arbitrage remains the only strategy in the red for the year.

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