Hedge Funds End 2006 up +12.07%

Date: Tuesday, January 16, 2007
Author: Greenwich Alternative Investments

The Greenwich Global Hedge Fund Index (the "Index") returned +1.49% in December (+12.07% YTD), according to hedge fund index provider Greenwich Alternative Investments, LLC. By comparison, the S&P 500 returned +1.40% (+15.79% YTD). Overtime the Greenwich Global Hedge Fund Index has been a consistent source of returns with lowerrisk than that associated with equity benchmarks. Over the last five years, from January 2002 through December 2006, the Greenwich Global Hedge Fund Index had annualized returns of+9.23% versus the S&Ps annualized performance of +6.18%.

"Hedge funds finished the year strong, posting Q4 gains of +5.33%," said Ben Rossman, General Manager of the Database and Indexation Group. "Throughout the year, long-biased strategies benefited from widespread strength in equity markets, owing largely to market belief in the resilience of the U.S. economy. Dedicated short sellers, however, were penalized throughout the year due to appreciation of global equities. Emerging Market strategies performed best in 2006, ending the year up +21.32%."

The December Index includes 1,007 funds. Final Index results will be calculated and posted at http://www.greenwichai.com/ at the end of January, after additional funds have submitted returns.

Strategy Group Summary

The Specialty Strategies Group, comprising emerging markets, multi-strategy, and income hedge funds, returned +2.06% (+16.56% YTD) in December. Emerging strategies once again led the pack, returning +2.72% (+21.32% YTD), amid unabated investor optimism on the strength of emerging economies. The Greenwich Global Multi-strategy and Income indices returned +1.50% (+12.06% YTD) and +0.74% (+9.54% YTD), respectively.

The Long/Short Equity Group returned +1.45% in December (+12.69% YTD) as long-biased strategies captured the upward movement in equities. The Greenwich Global Aggressive Growth, Opportunistic, Value, and Short Selling strategies posted December returns of +1.74% (+12.13% YTD), +1.52% (+13.30% YTD), +1.41% (+13.35% YTD), and +0.19% (-5.86% YTD), respectively.

The Directional Trading Group, comprising futures, macro-oriented, and market timing strategies, returned +1.40% in December (+6.55% YTD). The Greenwich Global Futures, Macro, and Market Timing indices returned +1.57% (+6.50% YTD), +1.36% (+6.64% YTD), and +0.26% (+8.58% YTD), respectively.

The Market Neutral Group gained +1.29% in December (+11.65% YTD). The Greenwich Global Event-Driven, Equity Market Neutral, and Market Neutral Arbitrage strategies gained +1.55% (+13.60% YTD), +1.53% (+8.62% YTD), and +1.01% (+11.38% YTD), respectively.

Greenwich Investable Index

The Greenwich Investable Hedge Fund Index returned +1.78% in December (+10.76% YTD). The Investable Index, comprising 45 funds, adds investability, active management and liquidity to the diversification and performance benefits of the broad Greenwich Global Hedge Fund Index. Since its inception in January 2003, the Investable Index has achieved an annualized return of +10.69% versus +11.65% for the Greenwich Global Hedge Fund Index. Cumulatively from inception through December, the Investable Index has gained +50.11% compared to +55.41% for the Global Index.

The Investable Index has a correlation of 0.95 and beta of 0.90 to the Global Hedge Fund Index. The Investable Index is reported monthly net of a 0.04% Index calculation fee. Past performance and Greenwich Hedge Fund Indices construction rules may be viewed at www.greenwichai.com.

Greenwich (and its affiliates) manages one of the world's largest hedge fund databases and is among the oldest providers of hedge fund indices, research, and solutions to institutional investors worldwide.

The accuracy of information reported by managers is not audited or independently verified and may not represent all hedge funds. Greenwich does not necessarily perform due diligence on reporting managers. Hedge fund returns are net of underlying fees and performance allocations, the timing of which may affect reported performance. Averages are equally weighted. Past results are not indicative of future performance.

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