Hedge Funds Mitigate Global Losses In June

by Phillip Morton, Investors Offshore.com

16 July 2008

Both the Greenwich Global Hedge Fund Index (GGHFI) and the Greenwich Composite Investable Index (GI2) lost only a fraction of their gains in May, posting -0.42% and -0.38% on the month, respectively, Greenwich Alternative Investments has announced.

Despite the small loss in May, the GGHFI was well ahead of the S&P 500 Total Return (-8.43%), the MSCI World Equity (-8.10%), and the FTSE 100 (-7.06%) equity indices.

Year-to-date, both the GGHFI and the GI2 remain flat, returning an identical -0.10%, while the S&P 500 Total Return, MSCI World Equity, and FTSE 100 Indices have produced returns of -11.92%, -11.76%, and -12.87%, respectively. 50% of constituent funds in the GGHFI ended the month with gains.

“The downside protection that characterizes hedge funds is clearly evident this year with long-only equity indices experiencing losses of 10% or more while hedge funds are essentially flat,” notes Margaret Gilbert, Managing Director.

Directional Trading managers were the strongest performing group of hedge funds in June, posting a return of 2.02%.

CTA/Futures managers continued their impressive year-to-date performance by gaining another 2.84% for the month on strength in commodity markets.

Market Neutral Funds lived up to their description during the month, gaining 0.32% despite turbulent circumstances in debt and equity markets.

Equity Market Neutral funds were the best-performing among these managers, advancing by 1.88%. Arbitrage and Event Driven managers posted mixed results with the majority of managers losing ground on the month.

Long-Short Equity funds lagged the global index during the month, losing -1.30%. The weakness in this sector was punctuated by an exceptional month for Short-selling managers who gained 9.39%, making them the second best performing sub-strategy group on the year.

Finally, Specialty Strategy managers exhibited the weakest returns among funds in June, returning -1.86% on average.

Emerging Market funds were notably lower as the effects of declining global equity indices began to show in manager returns.

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