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Hedge funds provide shelter in most severe markets in years

Date: Tuesday, July 15, 2008
Author: HedgeFund.net

HFN Hedge Fund Aggregate Average -0.61% in June, -0.02% YTD:

From HedgeFund.net: Early estimates show the HFN Hedge Fund Aggregate Average, an equal weighted benchmark of all single manager hedge funds and CTA/managed futures products in the HedgeFund.net database, was -0.61% in June and -0.02% YTD. The HedgeFund.net database consists of over 8,200 current hedge fund, fund of funds, and CTA products.

Equity and credit markets experienced severe conditions in June and 2008 has been one of the more difficult years in recent memory. It is during times like these that hedge funds have historically separated themselves from other asset classes to produce positive long term outperformance. That hedge funds are negative in 2008 is less important than the fact the average hedge fund has outperformed the S&P 500 TR by more than 1000 basis points through June.

Prior market downturns have provided similar opportunities. In 2000, 2001 and 2002 the S&P500 returned -10.14%, -13.04% and -23.37% while the average hedge fund was +17.52%, +11.39% and +5.74%. It is because of periods like these that the HFN Aggregate Average produced an annualized return since 1997 more than double the S&P500 TR, +13.06% to +6.15%.

HFN data through June shows hedge funds with a wide range of returns, but on an aggregate basis funds have offered significant protection during the most severe equity and credit markets in years. Commodity focused managers have produced the best performance in 2008; the HFN CTA/Managed Futures Average was +3.42% in June and +13.94% YTD. Energy sector funds have performed well compared to broad equity markets yet underperformed energy sector equity indices. The HFN Energy Sector Average was +1.56% in June and +4.79% YTD.

A full report on June regional and strategy specific performance will be available later in the month at www.hedgefund.net