Hedge Funds Recover, But Trail Equity Returns

by Carla Johnson, Investors Offshore.com

12 September 2006

Hedge fund returns look to have recovered in the month of August after Greenwich-Van Advisors, LLC, a leading hedge fund index provider, revealed that the Greenwich-Van Global Hedge Fund Index returned a provisional 1.30%.

"Hedge fund returns bounced back in August after increased market volatility over the summer spooked many hedge fund managers which created selling pressure," noted Wade McKnight, Vice President of Greenwich-Van.

"Better than expected earnings growth and a pause in interest rate tightening created an attractive trading environment for most equity and fixed income strategies," he added.

According to McKnight, emerging market managers delivered the strongest results in August, followed by equity-based strategies, while short sellers delivered the weakest results.

However, Greenwich-Van's provisional data shows that hedge funds generally underperformed equity benchmarks last month, with the S&P 500 returning 2.38%, the NASDAQ returning 4.41%, and the Nikkei 225 returning 4.42%. Meanwhile, the Lehman Brothers Aggregate Bond Index returned 1.53%.

The August 2006 Greenwich-Van Global Hedge Fund Index preliminary results included 324 funds. An updated August return for the Index, based on a larger sample of funds, will be released in mid-September.

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