Hedge Funds Plunge 4.42% In Q1

by Phillip Morton, Investors Offshore.com

11 April 2008

Hedge funds lost 2.40% in March, extending losses for the first quarter of 2008 to 4.42%, according to the Barclay Hedge Fund Index compiled by BarclayHedge.

“Following a strong recovery in February, hedge funds suffered another setback in March,” stated Sol Waksman, founder and president of BarclayHedge.

“Fear of a collapse at Bear Stearns followed by the euphoria of a Fed bailout created large price swings in the equity markets, and made it a difficult trading month for both bulls and bears," Waksman added.

Seventeen of Barclay's 18 hedge fund indexes declined in March. The Emerging Markets Index dropped 5.65%, Multi-Strategy fell 3.45%, Healthcare and Biotechnology lost 3.10%, Event Driven was down 2.79%, and Pacific Rim Equities lost 2.50%.

“Losses were wide-spread due to the volatile markets,” continued Waksman. “At this point, 78% of the hedge funds on our platform have reported a negative return for March.”

The BarclayHedge Fund of Funds Index was down 2.49% in March.

However, investors who have money in short-biased funds have seemingly benefited the most from the recent twists and turns in the markets. The BarclayHedge Equity Short Bias Index was up 1.50% in March, and has gained 12.44% for the first quarter of 2008.

“The best-performing hedge fund strategy in 2008 has been shorting the market,” confirmed Waksman.

“In fact, Equity Short Bias has five straight months of gains, up 21.90% since November 2007, an enviable return in these turbulent times," he observed.

BarclayHedge, formerly known as The Barclay Group, was founded in 1985, and actively tracks more than 6,600 hedge funds, fund of hedge funds, and managed futures programs. Barclay has created and regularly updates 18 proprietary hedge fund indexes and eight managed futures indexes.

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