Van Hedge Fund Index Declined In March

by Phillip Morton, Investors Offshore.com

19 April 2005

The Van Global Hedge Fund Index fell 0.7% net of fees in March according to hedge fund index provider Van Money Manager Research, LLC, reducing the return for the first quarter to less than 1%.

The Van US Hedge Fund Index, which measures the performance of US-domiciled hedge funds, declined 0.9% net in March, while the Van International Hedge Fund Index, a composite of returns of funds domiciled outside the US, performed slightly better, losing 0.6% net.

For the year to date, the Van US Hedge Fund Index has gained 0.1% net while the Van International Hedge Fund Index has risen 1.5% net.

Despite the negative return in March, hedge funds as measured by the Van index still fared better than the broad equity markets. According to Van, The S&P 500, MSCI World Equity Index, and Dow Jones Europe Stoxx 50 Index fell 1.8%, 2.2%, and 3.1%, respectively, in March. For the first quarter, these equity indices fell 2.1%, 1.5%, and 1.8%, respectively.

Meanwhile, fixed income markets fared little better with the Lehman Brothers Aggregate Bond Index falling 0.5% in March and 0.5% in the quarter.

Blaming poor market conditions, Van reported losses in all four of its global strategy group indices. The Market Neutral Group performed best, losing 0.3% net in March followed closely by the Directional Trading Group with a 0.5% loss. The Long/Short Equity and Specialty Strategies Groups both declined 1.0%.

For the first quarter, the Specialty Strategies Group continues to lead with its 2.4% net gain. Only the Directional Trading Group has suffered a loss so far this year with a 1.6% decline.

Two of VAN’s thirteen individual global hedge fund strategy indices made gains in March, led by Short Selling, which gained 2.5% net. Market Neutral Securities Hedging was the only other individual strategy to produce a gain.

In the first quarter, ten of the individual global hedge fund strategy indices increased in value, led by Short Selling, up 2.5% net, Emerging Markets, up 3.0% net, and Income, up 2.1% net. Futures and Aggressive Growth continue to be the worst-performing strategies for the year, both losing 3%.

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