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Hedge Funds Have Produced Year’s Best Returns, Although Performance Lags Stocks

by Phillip Morton, Investors Offshore.com

20 December 2004


November proved to be the best month for hedge funds so far in 2004, according to the Van Global Hedge Fund Index, which gained 2.8% net for the month.

The November Index figure provided by the hedge fund consultant represents the average net return of approximately 800 hedge funds that report to the firm. For the year to date through November, the Index has gained 6.2% net.

The Van US Hedge Fund Index, which is calculated only from funds domiciled in the United States, performed even better with a 3.4% net gain for November whilst the Offshore Hedge Fund Index, based on funds domiciled outside the US, gained 2.1% net for the month.

The US Index has risen 6.8% net for the year to date with the Offshore Index gaining 5.5% net.

However, the average hedge fund couldn’t keep pace with stocks’ sharp upturn last month as the S&P 500 rose 4.0%, the MSCI World Equity Index by 5.1% and the Dow Jones Europe Stoxx 50 by 5.8%.

Nevertheless, according to Van, hedge funds did succeed in delivering broad-based gains in November with almost 90% of the funds in the Van Global Hedge Fund Index reporting a positive net return.

The Van Global Hedge Fund Index’s 6.2% net gain for the year to date also trails most major stock indices. The S&P 500 has gained 7.2% while the MSCI World Equity Index and the Dow Jones Europe Stoxx 50 have each returned 8.8%.

Bonds, however, have underperformed hedge funds in 2004, revealed Van. The Lehman Brothers Aggregate Bond Index, which slipped -0.8% in November, has gained just 3.4% for the year to date.

A comprehensive report in our Intelligence Report series examining offshore investment, offshore stock exchanges, and hedge funds is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp

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