Hedge Funds Off To Flying Start In Q1 2006

by Phillip Morton, Investors Offshore.com

18 April 2006

Hedge funds have enjoyed their best first quarter returns in six years, bolstered by firm gains in global equity markets, particularly in emerging markets, according to the Barclay Group, a hedge fund research and advisory firm.

“Despite recent prognostications of the demise of hedge funds, 2006 has gotten off to the best start since Q1 of 2000, when the Barclay Hedge Fund Index gained 9.65 percent,” says Sol Waksman, founder and president of The Barclay Group.

The Barclay Hedge Fund Index gained 1.86% in March.

“Six years ago, both the DJIA and the tech-heavy NASDAQ reached all-time highs. Then, as now, hedge fund returns were given a boost by rising equity markets," adds Mr Waksman.

Barclay’s Emerging Markets Index continued its strong performance, up 9.99% in the first quarter of 2006. Emerging Markets gained 22.15% in 2005.

“Right now, Emerging Markets is the best performing hedge fund sector, gaining close to 108 percent during the past three years,” continues Mr Waksman.

“This demand-driven rally has been fuelled by yield-hungry fixed income investors and value equity investors," he notes.

Overall, 17 of Barclay’s 18 hedge fund indexes showed gains in March. Barclay’s Equity Long Bias Index rose 2.74%, Technology was up 2.68, Event Driven gained 2.58%, and European Equities gained 2.31%. Only Equity Short Bias lost ground, down 1.79% in March.

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