Hennessee: Hedge Funds Up 1.43% In Feb. On Cautious Positioning

Mar 8 2011 | 5:46pm ET

Concerns about the pace of the current equities market rally and unrest in the Middle East and North Africa have hedge funds back on their heels somewhat in the early going of 2011.

The Hennessee Hedge Fund Index returned 1.43% last month, again trailing the broader markets, with the Standard & Poor's 500 Index rising a more robust 3.2%. For the first two months of the year, the Hennessee Index has returned less than half the return of the S&P500, with the former up 2.15% against the latter's 5.53%.

"Managers have underperformed in 2011 due to conservative portfolio positioning,” said Lee Hennessee, managing principal of the Hennessee Group. “While most believe that the economic recovery will continue, the market’s strong rally over the past two years has priced in a lot of positive news.  Thus, many managers are cautious and are willing to sacrifice some upside participation in order to be protected in case of a correction.”

Only one strategy outperformed the S&P500 in February, growth funds with a 3.65% return (4.28% year-to-date). And only one has done so year-to-date, private investments in public equities and private financing funds, up 5.85% through February (3.01% in February).

Other strong performers last month included event-driven funds (2.14% in Feb., 4.01% YTD), financial equities funds (2.13%, 3.09% YTD) and healthcare and biotechnology funds (2.07%, 0.74% YTD).

Three strategies lost ground on the month: short-bias (down 2.47%, down 3.77% YTD), emerging markets (down 0.88%, down 1.43% YTD) and Asia-Pacific (down 0.71%, down 0.36% YTD).

All three of Hennessee's overarching indices, long/short equity, arbitrage/event driven and global macro, were in the black in September at 1.79% (2.33% YTD), 1.52% (3.45% YTD) and 0.49% (0.08% YTD), respectively.

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…