2007 Off To A Good Hedge Fund Start

Date: Monday, February 5, 2007
Author: Dailyii.com

The New Year appears to be off to a good start, though decidedly less robust than a year ago. All six hedge fund benchmarks in the Dow Jones Hedge Fund Strategy finished January in positive territory, still benefiting from the feel-good feeling throughout the financial industry and the stellar final three months of hedge fund returns, which gave the industry its best year in three. Merger arbitrage was the best performer, soaring 2.5%, followed by equity long/short, which soared 2.2% in January, but that’s almost only half as good as a year ago, when that strategy produced 4.1% in the first month of 2006. Likewise, convertible arbitrage, one of the comeback kids last year, inched up only 0.7%, while by the end of January 2006, it had grown 1.9%. Equity market neutral gave a repeat performance, as it moved up 0.5% last month, compared with 0.6% a year ago. Event driven rose 1.9% and distressed securities, 1.7%, dipping from the 2.2% it gained the month before. As earlier reported, Dow Jones is considering adding new strategies to its hedge fund benchmark.