Hedge Funds Turn Positive For 2009

by Leroy Baker, Tax-News.com, New York

14 April 2009

Hedge funds as measured by the Greenwich Global Hedge Fund Index ("GGHFI") advanced during the month of March and moved into positive territory for the year. The GGHFI returned +1.50% while the Greenwich Composite Investable Index ("GI2") declined 3.17% during the month, compared to global equity returns in the S&P 500 Total Return +8.76%, MSCI World Equity +7.24%, and FTSE 100 +2.51% equity indices. 60% of constituent funds in the GGHFI ended the month with gains.

"The majority of hedge funds were able to move up with equity markets during the month of March. Most managers tracked in our index are now positive on the year and continue to capitalize on market volatility," notes Margaret Gilbert, Managing Director.

Market Neutral funds turned in another excellent month in March, with funds gaining +0.85% on average and 8 of 9 sub-strategies showing positive returns. Convertible Arbitrage managers continued their success in 2009 with a gain of +2.92% in March, bringing their YTD performance to nearly +10%. Event Driven managers also contributed to the gains in the strategy group, netting +1.77% on average. Special Situations managers were the best performing sub-group among these funds, climbing +2.50%. Distressed funds also advanced by +1.80%. The only Market Neutral managers who declined during the month were Other Arbitrage funds, falling by 1.74%.

Long/Short Equity managers were the second best hedge fund strategy group in March, returning +2.45% on the strength of surging global equity markets. Value managers outshined Growth funds during the month, with both advancing +3.29% and +2.69%, respectively. Short sellers suffered a difficult month as they fought a strong rebound in equity values and lost 5.65% on average.

Directional Trading funds were the only hedge fund strategy group to decline during March, losing -1.08% on average. Macro and Market Timing funds actually advanced with returns of +0.60% and +1.44%, respectively, but Futures managers were the primary reason for the decline in the strategy group. CTA managers struggled to find profitable trades within the commodity complex and as a result, this sub-strategy fell by -1.96% in March.

Finally, Specialty Strategy managers were the best performing group of hedge funds during March, primarily due to strong returns from Emerging Market funds. These managers gained +4.76% on average while Fixed Income and Multi-Strategy managers advanced +2.00% and +0.49%, respectively.

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