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Portfolio > Alternative Investments > Hedge Funds

Positive December for Funds Tracked by MSCI

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NEW YORK (–Hedge funds returned 1.3% in December, according to preliminary data compiled by Morgan Stanley Capital International.

For the year, the MSCI Hedge Fund Composite returned 3.9%, also based on preliminary data for December and using backdated performance for MSCI’s index, which was launched last year with June’s returns. Final performance for November was revised slightly to 1.1% from preliminary returns of 1.2%.

The returns came while world equity markets were performing poorly. The Standard & Poor’s 500 stock index returned negative 5.9% in December and negative 22.1% in 2002. The MSCI World Equity Index returned negative 4.9% and negative 21.1% in the same respective periods. The MSCI World Sovereign Debt Index returned 5% in December and 19.6% in 2002.

The overall index returns were boosted by strong performance from managers in MSCI’s Directional Trading Index, which returned 5.1%. The Directional Trading index is made up of futures funds, global macro funds and other directional-focused funds. That category returned 13.1% in 2002. For November, the final performance number was negative 1%, a slight change from the preliminary results of negative 1.1%.

The MSCI Specialist Credit Index, which includes distressed and long/short credit funds, returned 1.9% in December and was up 4.2% for the year. Final November returns came in at 1.7%, down from preliminary returns of 1.8%.

The MSCI Relative Value Index returned 1.8% in December and 7.4% in 2002. The index is composed of arbitrage managers, such as merger arb and statistical arb funds. November returns were unchanged from preliminary results at 0.6%.

The MSCI Multi-Process Group Index returned negative 0.3% in December and positive 0.7% in 2002. The Multi-Process index includes event-driven and multiple strategy funds. Final November results were 1.8%, down from preliminary returns of 2%.

MSCI’s Security Selection Index, which is composed of long/short equity, market neutral and short-biased managers, returned negative 0.5% in December and down 1.2% during the year. November’s final returns were 2.1%, after preliminary data showed returns to be 2.4%.

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