January a Downer for S&P-Tracked Hedge Funds

NEW YORK (HedgeWorld)–Hedge funds in the Standard & Poor’s index followed up a decent December with a mostly negative performance in January.

Overall, the S&P Hedge Fund Index was down 0.47% for the first month of the New Year, with only the Arbitrage Index and Equity Long/Short Global ex-US in positive territory, at 0.31% and 0.74%, respectively.

The index finished December 2004 up 1.23%.

Managed futures had a tough start to the year, chalking up a negative 6.34% return. Among others in the red was the Directional/Tactical Index, at negative 1.66% for January, with all three of its underlying strategies–managed futures, equity long/short and macro–posting negative numbers.

Currency positions accounted for much of the losses among trend followers and discretionary global macro advisers, according to S&P. A continued pullback of energy and metal prices from their highs also had a negative impact.

“These sharp reversals, caused in part by uncertainty leading up to the Iraqi elections, were particularly difficult for many managed futures programs as these positions, young in existence, were quickly liquidated at stops placed outside the market,” said Justin Dew, senior hedge fund specialist at S&P, in a statement.