Despite equity markets selling off sharply, hedge funds fared pretty well in June, according to Hennessee Group LLC, an advisor to hedge fund investors.
The Hennessee Hedge Fund Index declined -0.64% in June (-0.85% YTD) while the S&P 500 declined -8.60% (-12.84% YTD), the Dow Jones Industrial Average declined -10.19% (-14.43% YTD), and the NASDAQ Composite Index declined -9.10% (-13.53% YTD). Bonds fell, as the Lehman Aggregate Bond Index declined –0.08% (+1.13% YTD).
“Hedge funds preserved capital as the equity markets declined sharply in June,” said E. Lee Hennessee, Managing Principal of Hennessee Group, in a release. “Many managers struggled in the first quarter as they were whipsawed by huge swings in volatility. However, during the second quarter, managers performed better as they maintained well-hedged, tighter exposures.”
The Hennessee Long/Short Equity Index declined -0.35% in June (-1.07% YTD) despite the equity markets selling off sharply, the company said. “Managers were able to outperform the broad market due to conservative positioning (low gross and net exposures). In addition, managers were able to profit off short positions in the financial sector, which continued to decline in June. With the broad indices flirting with official ‘bear market levels’ (down over -20% from highs in October 2007), managers remain extremely cautious and are hesitant to put money to work,” Hennessee said.