US Interest Rate Decision Knocks S&P Hedge Fund Index In June

by Carla Johnson, Investors Offshore.com

13 July 2004

Standard & Poor's Hedge Fund Index ended June in negative territory, down 0.25% as hedge fund manager repositioned themselves ahead of last month’s interest rate increase by the Federal Reserve, according to analysts.

Commenting on the figures, Justin Dew, senior hedge fund specialist at S&P stated:"We noted a reduction of risk and repositioning by many hedge fund managers in advance of the interest rate increase."

In positive territory, the S&P Event Driven Index ended up 0.37% for the month. The S&P Equity Long/Short Index also had a positive return of 0.29% for the month as returns varied widely from manager to manager.

However, other strategies were not so successful. The S&P Directional/Tactical Index was the weakest performing sub-index for June, falling 0.91%.

The S&P Managed Futures Index also continued a run of poor returns, falling 4.72% in June to end the quarter down 13.79%. "Reversals in energy prices at the prospect of greater post-handover stability in Iraq and choppy trading in both currency and interest rate futures hurt this group of predominately medium to long-term trend followers," observed Mr Dew.

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