Hedge Funds Hold Ground In July

by Phillip Morton, Investors Offshore.com

10 August 2007

Despite concerns over losses in the sub-prime mortgage industry, hedge funds gained 0.62% in July, according to flash estimates from the Barclay Hedge Fund Index.

“There have been some well-publicized losses among a few high-profile funds that invest in sub-prime mortgages,” announced Sol Waksman, founder and president of The Barclay Group. He continued:

“Those losses highlighted weaknesses in the fixed income sector and sparked a wave of selling in equity markets that sent stock prices into the loss column for July.”

Eleven of Barclay's 18 hedge fund indexes gained ground in July. The Equity Short Bias Index jumped 6.56%, Emerging Markets rose 3.19%, Pacific Rim Equities gained 1.67% and Technology was up 1.66%.

“Although we're seeing more hedge fund losses this month, the bottom line is that the overall hedge fund index and fund of funds index are positive once again. Except for the handful of funds that blew up, the sky is not falling," observed Waksman.

All of Barclay's 18 hedge fund indexes are up for the year, ranging from a 2.12% gain for the Equity Short Bias Index to a 16.46% gain for the Emerging Markets Index. After seven months, the Barclay Hedge Fund Index has returned 8.05%.

“This is the 13th consecutive profitable month for hedge funds. However, the ratio of winners to losers this month has dropped to 55/45 versus approximately 80/20 for the first six months of the year,” revealed Waksman.

Several sectors lost ground in July. The Healthcare and Biotechnology Index fell 2.48%, Merger Arbitrage lost 1.59%, and the Event Driven Index was down 0.66%.

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