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Portfolio > Alternative Investments > Hedge Funds

March Minus: Hedge Funds Negative for Month, Stay Ahead of Equities

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NEW YORK (–The end of the first quarter was not a jubilant occasion for many hedge funds, with managers posting negative returns for March.

According to preliminary data from MSCI, hedge funds falling within the MSCI Hedge Fund Composite Index lost 0.5% last month. Still some managers can be consoled by the fact that they are still beating the MSCI World Equity Index, which dipped by 1.9% for the month.

The returns may be tiny, but the stakes are not since many hedge funds are still struggling to overcome 2004′s disappointing gains. For the year-to-date through March, directional-trading strategies lost 2.2%, while the other MSCI indexes posted gains of between 0.3% and 2%.

The Composite Index of hedge funds is up 0.4% year-to-date, while equities are negative 1.1%

According to MSCI preliminary index figures, March did not discriminate much among hedge fund strategies.

The MSCI Directional Trading Index last month posted a loss of 0.5%, which practically negated its meager 0.7% gain in February. The only positive-performing index, the MSCI Specialist Credit Index, returned just 0.4% in March. Specialist credit funds are strategies that lend to credit sensitive issuers.

In March, performance of the MSCI Relative Value Index and the MSCI Multi-Process Group Index dipped by 0.1% and 0.2% respectively. The worst-performing process group was the MSCI Security Selection Index, which lost 0.9% during the same time period. The security selection group, which includes long-bias and short-bias managers, is still up 1% for the year to date through March.

The MSCI Hedge Fund Database has grown to encompass more than 2,000 hedge funds. The indexes in turn are composed of more than 190 indexes representing more than US$260 billion in assets.

Contact Bob Keane with questions or comments at: [email protected].


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