Hennessee Hedge Fund Index Posts Negative Return For May

by Carla Johnson, Investors Offshore.com

15 June 2004

Hedge funds produced a negative return of - 0.37% in May, bringing the 2004 year to date return to + 1.82%, according to data released by the Hennessee Hedge Fund Index.

This meant that hedge funds in May were generally outperformed by the main equity benchmarks, notably the S&P 500 and the Nasdaq which gained 1.37% and 3.50% respectively, although the Dow Jones Industrial Average slipped back - 0.36% last month.

The Hennessee Technology Index was the top-performing index in May, with a return of + 1.93% (- 0.81% year to date). Having suffered a - 3.71% drop in April, the sector bounced back as managers began to increase their risk tolerance.

The next best performer for the month was the Hennessee Financial Equities Index with a return of + 0.72% (+ 1.66% year to date) as managers looked to capitalize on undervalued stocks following a recent sell-off sparked by interest rate fears.

The Hennessee Europe Index was the worst performing strategy in May, with a decrease of - 2.34% (+ 1.13% year to date), which the firm attributed to the negative impact of high oil prices on the prospects for economic growth.

The Hennessee Pacific Rim Index also fared badly, posting a loss of - 2.24%, as did the Hennessee Emerging Markets Index, falling back - 1.54% as the investor’s move away from riskier investments affected emerging markets although the sector remains up 2.40% year to date.

Commenting on the data, Charles Gradante, Managing Principal of Hennessee Group LLC, stated: “Hedge fund managers are calling this ‘the I.O.U. market’ (interest rates, oil, and unemployment). Positive developments on all three fronts have given hedge fund managers encouragement to increase their equity exposure.”

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