Perhaps Hedgies need to come up with some different strategies to justify those 20% fees off the top.
Hedge funds trail stock market in July -CSFB
Mon Aug 15, 2005 05:25 PM ET
By Svea Herbst-Bayliss
BOSTON, Aug 15 (Reuters) - Hedge funds, the hugely popular and loosely regulated investment pools that often promise to make money in all markets, delivered positive returns but lagged the major indexes as stocks rallied in July, new data show.
The average hedge fund returned 1.92 percent in July, trailing the Dow Jones industrial average's gain of 3.6 percent and the Nasdaq Composite Index's advance of 6.2 percent, according to the Credit Suisse First Boston Tremont Hedge Fund Index, released on Monday.
Hedge funds generally fared better in July than in June, boosted by returns at funds that specialize in picking stocks. So-called long/short equity funds that can make money either by buying stocks or betting against the company's future by selling its securities short delivered a 2.68 percent gain last month, the biggest gain in those four weeks.
In the first seven months of the year, hedge funds made good on their promise to outpace the broader markets. But their returns were still meager, falling far short of the outsized double-digit gains that made them famous years ago.
For the year to date through July, the average hedge fund was up 3.29 percent, while the Dow average was down 1.3 percent and the Nasdaq was up 0.4 percent.
In the first half of the year, worries about rising interest rates, slower economic growth and high oil prices held stock prices back and hedge funds made money -- albeit small amounts -- by betting that stocks would fall, oil prices would climb and the dollar would recover.
FALLING SHORT
In July, funds that bet exclusively against the future of a company by selling its stock short lost 1.66 percent, the only strategy to lose money last month.
"Driven by rallying global equity markets, Long/Short Equity and Emerging Markets managers posted strong results in July," Oliver Schupp, president of the index, said in a statement.
Convertible arbitrage funds, which often bet a company's stock will fall while its bonds will rise and whose poor performance had weighed on overall hedge fund returns this year, recovered ground in July by returning 1.71 percent. While they are still the industry's worst performers for the year to date, they have slashed losses from 7.23 percent in the first five months to 4.74 percent in the first seven months.
As of July 31, 414 funds reported their returns to the index, higher than the number reported earlier this summer. The index includes funds that accept new investments and funds that are closed in the United States and offshore, and must have a minimum of $50 million under management, a 12-month track record and audited financial statements.
Meanwhile CSFB/Tremont's investable hedge fund index , reflecting the performance of the largest funds, was up 0.88 percent in July and up 1.10 percent in the first seven months of the year.
CSFB/Tremont Hedge Fund Index (Total returns)
Month Year-to-date No of hedge funds July 1.92 3.29 414 June 1.31 n/a n/a May 0.15 0.03 409 April -1.04 -0.15 412 March -0.15 0.93 385 February 1.43 1.09 389 January -0.34 -0.34 390 December 1.61 9.64 382 November 2.65 7.91 384 October 1.28 5.12 387 September 1.01 3.79 379 August 0.14 2.75 387 July -0.31 2.61 401 June 0.34 2.93 413 May -0.23 2.58 425 April -0.58 2.82 433 March -0.28 3.42 410 February 1.40 3.13 414 January 1.70 1.70 416
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