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New CSFB/Tremont Hedge Fund Index Research on Hedge Fund Indices

Date: Thursday, February 15, 2007
Author: Credit Suisse/Tremont

Media Release
New Credit Suisse/Tremont Hedge Fund Index Research Reveals that hedge funds indices are not directly comparable to their traditional counterpart
New York, February 13, 2007 Credit Suisse Index Co., Inc. today released its latest industry commentary, The Hedge Fund Industry Rocks Both Bear and Bull Markets, revealing that the long and short term outlook for hedge funds makes them a favorable investment vehicle in both bull and bear markets with a uniqueness in asset mix and strategies that is not directly comparable to their traditional counterparts that represent a single asset class. Hedge funds are designed to preserve capital in periods of general market downturns while capturing upside potential with the advantage of hedging against systemic market shocks through the use of derivatives and short selling.


“The unique added value of hedge funds is their ability to produce attractive risk adjusted returns across a range of asset classes over a short and long term investment horizon, independent of broad market trends,” said Oliver Schupp, President of Credit Suisse Index Co., Inc. “Hedge funds, as represented by the Credit Suisse/Tremont Hedge Fund Index, maintain exposure to a range of asset classes making them a more balanced investment vehicle compared to traditional indices. Therefore, as a diverse portfolio of asset classes, a comparison to a traditional market index that represents a single asset class is misleading and inaccurate.”

Some of the findings in The Hedge Fund Industry Rocks Both Bear and Bull Markets include the following:

  • As 2006 came to a close, hedge funds used a diverse range of strategies and unique trading styles to profit from market trends resulting in nine out of the ten sectors of the Credit Suisse/Tremont Hedge Fund Index producing positive results.
  • Despite market downtrends in May and June combined with the collapse of one of the largest hedge funds that was ever recorded in history, hedge funds continued to attract a healthy level of assets under management.
  • In their quest for alpha, hedge funds do not seek strong correlation with global equity markets thus enabling divergence from market trends. The Credit Suisse/Tremont Hedge Fund Index suffered almost zero drawdown in the past ten years, ending December 2006. In contrast, during the bear markets of 2001 through 2003, most major equity markets indices on average lost over 40%.
  • Hedge funds seek positive returns regardless of market conditions. This is exhibited in the correlation between the Credit Suisse/Tremont Hedge Fund Index and MSCI World that declined in the aftermath of the tumble in the technology sector in 2000 and the global recession that followed. This decoupling effect enabled hedge funds to protect capital as well as to yield a reasonable gain for investors.

Credit Suisse/Tremont industry commentaries and publications are available on the Research page in the News & Press section of our website, www.hedgeindex.com.


Oliver Schupp, Credit Suisse, telephone 212 538 8179, oliver.schupp@credit-suisse.com
Meg Bode, Bode Associates, telephone 516 869 6610, meg@bodeassociates.com
John Gallagher, Credit Suisse, telephone 212 325 0932, john.t.gallagher@credit-suisse.com

Credit Suisse
As one of the world's leading banks, Credit Suisse provides its clients with investment banking, private banking and asset management services worldwide. Credit Suisse offers advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as retail clients in Switzerland. Credit Suisse is active in over 50 countries and employs approximately 62,500 people. Credit Suisse's parent company, Credit Suisse Group, is a leading global financial services company headquartered in Zurich. Credit Suisse Group's registered shares (CSGN) are listed in Switzerland and, in the form of American Depositary Shares (CSR), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.

In its asset management business, Credit Suisse offers products across the full spectrum of investment classes, ranging from equities, fixed income and multiple-asset class products, to alternative investments such as real estate, hedge funds, private equity and volatility management. Credit Suisse’s asset management business manages portfolios, mutual funds, and other investment vehicles for a broad spectrum of clients ranging from governments, institutions and corporations to private individuals. With offices focused on asset management in 18 countries, Credit Suisse’s asset management business is operated as a globally integrated network to deliver the bank’s best investment ideas and capabilities to clients around the world.

The asset management business of Credit Suisse is comprised of a number of legal entities around the world that are subject to distinct regulatory requirements; certain asset management products and services may not be available in all jurisdictions or to all client types.

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