Van Global Hedge Fund Index Displays Moderate February Performance

by Carla Johnson, Investors Offshore.com

18 March 2004

The Van Global Hedge Fund Index posted a 1.2% net gain in February according to leading hedge fund consulting group Van Hedge Fund Advisors International.

The Index, which includes only US-domiciled hedge funds, returned 1.1% net for the month, while the Van Offshore Hedge Fund Index, which includes those funds based outside the US, rose 1.3% net. The Index return reflects the average performance, net of fees, of more than 800 hedge funds, including funds of funds, employing a range of trading strategies.

Hedge fund gains came amid mixed equity markets in February, as the S&P 500 gained 1.4% but the NASDAQ fell -1.7%. Fixed income investments also trailed hedge funds as the Average Taxable Bond Mutual Fund gained just 0.6% for the month. For the year to date, the Van Global Hedge Fund Index has earned 3.2% net, nearly equalling the S&P 500, which has earned 3.3% over the first two months of 2004.

About three-quarters of the funds included in the Van Global Hedge Fund Index were positive in February, with returns ranging from worse than -12% net to better than 20% net. Although gains were widespread among all types of hedge fund strategies, there were considerable differences in the size of those gains.

"The Global Directional Trading Group index, which includes the Futures, Macro, and Market Timing strategies, was the most successful of our four broad strategy group indices, returning 4.2% net for the month," noted VAN Chairman George Van.

"At the other end of the range, the Market Neutral Group Index, which includes Market Neutral Arbitrage, Distressed Securities, and Special Situations funds, returned just 0.8% net. Widening credit spreads in February created less favourable conditions for many of those managers," Mr Van added.

In common with the CSFB/Tremont hedge fund index which also published performance results for February, Futures funds have outstripped other strategies averaging a 6.8% return, boosting the index to an 8.1% net year-to-date gain.

Meanwhile, Emerging Markets continued its streak as one of the best performing strategies last month, posting a 3.6% net gain in the Global Index, bringing its year-to-date return to 6.5% net. Also, Short Selling had its first winning month since last September, gaining 0.3% net in the Global Index.

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