Hedge Funds Rise As Markets Fall In June

Date: Monday, July 9, 2007
Author: FINalternatives

In spite of declining equity markets, hedge funds enjoyed another up month, the HFN Hedge Fund Aggregate Average shows.

Hedge funds rose 1.4% last month, the 11th consecutive positive monthly return for the index, HedgeFund.net said. Hedge funds’ year-to-date return now stands at 7.86%, retaking the lead from the Standard & Poor’s 500, which stands at 6.96% year-to-date after shedding 1.66% in June.

While hedge funds bucked the markets—even the HFN Long/Short Equity Average was up last month, adding 1.05% (8.89% YTD)—they were not immune to them. Short-biased funds profited from the market’s tumble, rising 2.65% last month. Unfortunately for short investors, the funds haven’t recovered from the beating they took over the months-long market rally, and short-biased funds remain down 2.48% on the year. Meanwhile, the HFN Finance Sector Average was burned by the growing subprime mortgage fiasco, falling 0.55% in June. It is down 1.09% in 2007.

Shorting wasn’t the only way to make money last month. The HFN CTA/Managed Futures Average soared 2.73% last month to reach 5.19% year-to-date after a slow start. Macro funds also enjoyed a strong June, rising 2.16% (6.03%). Emerging markets and energy funds remain the best performers year-to-date after June returns of 1.95% (11.21% YTD) and 1.24% (12.15% YTD), respectively.

Asia and Latin America remained good places to make money, as well, with returns of 2.31% (10.26% YTD) and 1.19% (16.54% YTD), respectively.