Greenwich: Hedge Funds Having Best Year In Four

Date: Wednesday, June 13, 2007
Author: FINalternatives

Hedge funds are on pace for their best year since 2003, as the Greenwich Global Hedge Fund Index rose 2.18% last month to reach 6.84% year-to-date.

But that’s not the only parallel with four years ago, when the Greenwich index rose 18.55%. Then as now, hedge funds trailed the broader markets, the Standard & Poor’s 500 jumped an impressive 26.38% in 2003; this year, the S&P500 is up 8.77% after rising 3.49% in May.

“Hedge funds are off to their strongest start since 2003, when the index was up 7.14% through May,” Greenwich Alternative Investments General Manager Ben Rossman said. “All 18 strategies, with the exception of short sellers, are on track for double-digit returns in ’07.”

Which is not entirely true: Greenwich’s short-selling subindex is on track for double-digit returns of the negative kind, as funds employing the strategy continue to be shelled by the booming equity markets. Short-selling funds covered by Greenwich fell 1.61% last month and are down 4.65% year-to-date.

Meanwhile, those strategies that swim with, rather than against, the current are doing very well, thank you. Aggressive growth funds are closely tracking the S&P 500, rising 3.44% in May (8.71% YTD), and the other non-short-selling members of Greenwich’s long/short equity group posted relatively big months, as well: opportunistic funds were up 2.61% (8.09% YTD) and value funds rose 2.46% (7.96% YTD).

Funds investing in emerging markets, where the equities boom is even more pronounced than in the U.S., continue to pace hedge funds in 2007; up 3.6% last month, the strategy has returned 10.53% this year and is the only Greenwich strategy beating the S&P 500 YTD.

Other strong performers in May included futures (2.62%, 3.37% YTD) and merger arbitrage (2.36%, 7.78% YTD). Year-to-date, top performers behind emerging markets include special situations (1.78%, 8.65% YTD), event-driven (1.92%, 8.26% YTD) and multi-strategy (1.99%, 8.13% YTD).

Investable hedge funds tracked by Greenwich rose 1.95% (6.05% YTD).