Hedge Funds Rise In July, Indices Show

Aug 13 2010 | 10:59am ET

Hedge funds posted gains in July, according to a trio of industry indices.

The Barclay Hedge Fund Index rose 2.15% on the month, the Lipper Hedge Fund Composite Index 1.83% and the Lyxor Global Hedge Fund Index 0.7%. But the Standard & Poor’s 500 Index rose more than 7%.

“All of the winds were blowing in the right direction in July,” says Sol Waksman, founder and president of BarclayHedge. “Equity markets rallied on the back of strong earnings and bond prices rose as inflation fears subsided.”

The Barclay index is now up 2.2% on the year, after all but one of its 18 subindices posted gains in July. Emerging markets funds rose 3.54%, equity long-bias funds 3.03%, technology funds 2.61%, multi-strategy funds 2.26% and fixed-income arbitrage funds 2.03%.

“As of today, 80 percent of the hedge funds that have reported returns for July are showing a profit for the month,” Waksman said.

Given the strong performance of the broader markets, it’s no surprise that equity short-bias hedge funds were the losers, dropping an average of 2.89% on the month.

The Lipper index’s July performance wasn’t enough to get it out of the red on the year. The benchmark is now down 1.76% in 2010.

Fixed-income arbitrage was the top-performing strategy at 3.23% in July, followed by other hedge funds (3.19%), long bias (3.12%) and long/short equity funds (2.5%). Managed futures funds returned 1.12% on the month, while dedicated short-bias funds fell 0.75%.

The Lyxor index is up 0.8% on the year.


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