July Brings Relief to MSCI Investable Index

By thinkadvisor | August 07, 2006 at 08:00 PM

Hedge funds put up a month of slightly positive returns in July, as investors in the MSCI Hedge Invest index saw an increase of 0.22% for the month.

NEW YORK (HedgeWorld.com)–Hedge funds put up a month of slightly positive returns in July, as investors in the MSCI Hedge Invest index saw an increase of 0.22% for the month.

Though meager, index investors can be satisfied with a return to positive performance, after watching drawdowns of 1.27% in June and 1.09% in May. Year-to-date, the index, which tracks 138 hedge funds as of the end of July, was up 2.67%.

The fixed-income index was the biggest contributor to the month's results, returning 1.02%; year-to-date the strategy is up 2.9%. Discretionary traders gained 0.87%, with a 1.83% return year-to-date; event-driven managers returned 0.77% and were up 3.68% year-to-date; and the variable bias category returned 0.46% and was up 2.47% year-to-date.

Convertible arbitrage, proving the strongest category so far in 2006 with a 4.78% year-to-date return, rose only 0.31% in July. The month was tougher for equity non-directional hedge funds, which returned just 0.14%, and even more so for long biased managers, who lost 0.08% in July. Both strategies remain positive for the year, at 2.28% and 2.37%, respectively.

Unfortunately, those gains were mostly undone by the index's largest subset, systematic trading, comprising 25 funds. Down 1.58% in July, the strategy remains positive for the year at 2.3%.

July's 0.22% return was the Hedge Invest index's first step back into positive territory since April. Since inception in July 2003, it has returned 15.79%.

JBunge@HedgeWorld.com

Contact Bob Keane with questions or comments at bkeane@investmentadvisor.com.

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