NEW YORK (HedgeWorld.com)–Standard & Poor’s added its February hedge fund index returns to the growing collection of evidence that January’s slow start may not be a sign of a backslide in hedge fund returns.
The S&P Hedge Fund Index gained 0.83% in February, bringing its total return for the first two months of 2005 to 0.36%–not exactly a blazing statistic, and considerably below the S&P 500 Stock Index’s 2.1% return for the month–but certainly an improvement over January’s negative 0.47% return. The Dow Jones Industrial Index rose 2.63% in February. The Nasdaq Composite Index fell 0.52%.
S&P’s Event-Driven sub-index led the way in February, posting a 1.53% return. According to S&P officials, distressed and special situations managers benefited from rising oil prices and overall upward movement in natural resource holdings. Increased merger activity also helped add some spice to February’s returns, said Charles Davidson, S&P’s senior hedge fund specialist, in a statement.
“Merger Arbitrage managers are finally starting to see opportunities in what has become an increasingly favorable environment,” Mr. Davidson said. “The positive tone in M&A activity is reflected in the upward price moves on acquirers’ stocks after announcements.”
In S&P’s Directional/Tactical sub-index, equity managers got the biggest boost. The S&P Equity Long/Short Index gained 1.8% on rallying markets, strong stock selection by managers and a trend toward more concentrated holdings, S&P officials said in a news release.