Van Hedge Fund Index Up 7.8% For 2004

by Carla Johnson, Investors Offshore.com

12 January 2005

The Van Global Hedge Fund Index, which tracks the performance of around 350 funds, posted a 1.6% net gain in December to finish 2004 up 7.8% net, according to preliminary results announced by the firm this week.

While hedge fund returns were somewhat muted in 2004, the figures mark the fourth straight positive month for the index and the seventeenth consecutive positive since its inception in 1988.

"Although hedge funds in 2004 didn't match their performance from the previous year, they performed well given the challenges they faced: a range-bound stock market until the November elections, rising oil prices and interest rates, and dampened volatility during parts of the year,” observed George Van, chairman of Van Hedge Fund Advisors International.

However, stronger equity markets in the last few weeks of 2004 meant that the major stock markets outperformed hedge funds in the index by the end of last year, with the S&P 500, the MSCI World Equity Index and the Dow Jones Europe Stoxx 50 having gained 10.9%, 12.8%, and 13.2% respectively.

Nonetheless, December was a positive month for the majority of hedge funds, and 84% of those included in the preliminary December Van Global Hedge Fund Index reported a net gain.

With the exception of Short Selling, all hedge fund strategies showed a positive average return for December, with Distressed Securities and Value strategies performing particularly well over both the month and the year.

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