March Losses Erase February Gains For Hedge Funds

by Phillip Morton, Investors Offshore.com

18 April 2008

Hedge funds slipped 1.94% in March, erasing gains of 1.84% in February, according to the Greenwich Global Hedge Fund Index (GGHFI).

By comparison, the S&P 500, MSCI World Equity, and FTSE 100 indices posted returns of -0.43%, -1.25% and -3.10%, respectively.

Year-to-date, the GGHFI has returned -2.92%. Only 31% of constituent funds in the GGHFI ended the month with gains.

"Although hedge funds were noticeably weak during the month of March, their long-term trend of market outperformance remains intact," noted Margaret Gilbert, Managing Director, continuing:

"Year-to-date performance of the GGHFI still exhibits significant improvement upon returns of global equity indices."

The Directional Trading Group was the strongest performing strategy group of fund managers for the second month in a row, as their index fell by -0.51%. Futures managers were again the leaders in this group, earning a modest 0.03% return.

Long-Short Equity strategies suffered from unpredictable equity markets, finishing the month down -2.41%. For the third month in a row, dedicated short sellers were the top performers in this group, gaining 1.37%.

Specialty Strategy managers were the weakest among primary hedge fund strategy groups in March, falling -3.37% on average.

Emerging Markets managers continued to feel the effects of volatile global equity markets, as they dropped -4.62%.

The Market Neutral Group declined -0.84% on the month, displaying pockets of weakness among some sub-strategies.

Most notably, dysfunctional credit markets impacted managers within the Fixed Income Arbitrage and Convertible Arbitrage sectors as they returned -2.49% and -1.52%, respectively, during the month.

The March Index currently includes 1,000 constituent funds. Final will be posted be Greenwich in early April, once additional funds have submitted returns.

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