Hedge Funds Stutter Again In July

by Carla Johnson, Investors Offshore.com

10 August 2006

Early indications show that hedge funds produced another muted performance during the month of July, dipping by 0.07%, according to preliminary estimates for the Barclay Hedge Fund Index.

“Once again, we’re seeing equity-based directional strategies spilling most of the red ink,” stated Sol Waksman, founder and president of The Barclay Group.

“Share prices dropped during the first half of July, but by the end of the month rallied back to where they had started," he added.

Nine of Barclay’s 18 hedge fund indexes lost money during July. The Technology Index dropped 1.39%, Global Macro fell 1.36 %, Pacific Rim Equities were down 1.14%, and Equity Long Bias lost 1.12%.

“Macro Funds had to contend with a difficult environment, as prices in the energy markets continued the cycle of rally, retreat, and rally,” said Waksman.

The strongest gainer in July was Barclay’s Equity Short Bias Index, up 2.84%.

“Even though July’s net change in US share prices was quite small, short bias funds were able to hold on to profits gained during the first half and end the month in positive territory," he added.

Barclay’s Convertible Arbitrage was up 0.69%, Fixed Income Arbitrage gained 0.53%, and Emerging Markets gained 0.39%.

Waksman continued: “The stock indexes of the major emerging markets — Brazil, Russia, India, and China — all had gains this month.”

“Arbitrage strategies, which make investments based on price differences between securities of similar value, did well in July.”

Despite losing 2.29% during the past three months, the Barclay Hedge Fund Index is still up 5.57% for 2006.

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