Hedge Funds Decline by Fraction of Equity Markets

Hedge funds as measured by both the Greenwich Global Hedge Fund Index ("GGHFI") and the Greenwich Composite Investable Index ("GI2") declined marginally when compared with global equity returns during the month of October. The GGHFI and GI2 posted declines of -5.06% and -8.53% on the month compared to global equity returns in the S&P 500 Total Return (-16.79%), MSCI World Equity (-19.05%), and FTSE 100 (-10.71%) equity indices. Year-to-date, the GGHFI and the GI2 have shed -14.29% and -16.60%, while the S&P 500 Total Return, MSCI World Equity, and FTSE 100 Indices have lost -32.84%, -39.75%, and -32.21%, correspondingly. 36% of constituent funds in the GGHFI ended the month with gains.

"October's returns are the result of similar market conditions that impacted hedge funds in September. Although long/short equity funds were notably lower, other event driven and arbitrage funds that trade in more illiquid securities were also negatively affected due to redemptions and forced selling. " notes Margaret Gilbert, Managing Director.

Long/Short Equity managers experienced roughly half the losses of global equity markets during October, losing -7.88% on average.

Market Neutral funds once again felt the effects of illiquid credit markets during the month of October, falling by -4.59%. Convertible Arbitrage managers suffered their worst month to date, losing -19.96% as redemptions and forced selling worsened an already unstable market for convertible bonds

For the second month in a row, Directional Trading managers were up on average by 4.88%, capitalizing on volatile commodity markets.

Specialty Strategy managers were the weakest performing strategy group for the month, with funds losing -10.58% on average. Emerging Market funds suffered one of their worst months on record, losing -15.19% due to dramatic declines in BRIC equity indices.

The GGHFI is one of the oldest benchmarks of the hedge fund universe. Final index results for October will be available mid-November, once additional funds have submitted returns. The GI2, comprising 46 constituent funds, adds investability, active management, and liquidity to the diversification and performance benefits of the broad Greenwich Global Hedge Fund Index. It references actual hedge fund vehicles as opposed to separately managed accounts or other methods used in an attempt to replicate the returns of hedge fund vehicles. The GI2 is reported semi-monthly net of a 0.02% per period index calculation fee. Past performance and indices construction rules for all Greenwich Hedge Fund Indices may be viewed at www.greenwichai.com.

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Greenwich Alternative Investments, LLC (and its affiliates) manages one of the world's largest hedge fund databases and is among the oldest providers of hedge fund indices, asset management services, and research to institutional investors worldwide.

SOURCE: Greenwich Alternative Investments, LLC