Hedge Funds Hit Hard, Still Outperform Markets

Feb 12 2008 | 7:15am ET

Last month, hedge funds saw their biggest decline since July 2002, according to Greenwich Hedge Fund Indices. 

The Greenwich Global Hedge Fund Index fell -2.44% in January amid severe declines in global equity markets; the S&P 500, MSCI World Equity, and FTSE 100 indices fell by -6.0%, -7.71%, and -8.94%, respectively.

In spite of their dismal performance, 79% of hedge funds outperformed the S&P 500 during the month, with 33% ending the month in positive territory.

“Despite January being hedge funds’ weakest month since July 2002, hedge funds fell far less than equities,” notes Margaret Gilbert, managing director. “This ‘downside protection’ is particularly apparent over the last twelve months with hedge funds returning +7.14%, outperforming the S&P 500 by +9.45% during this period.”

For January, all four strategy groups outperformed the S&P 500.

Directional Trading ended up +0.81%, with positive performance driven by futures managers’ returns of +2.13%. Dedicated short sellers were the stellar performers, up +6.99%. Long-biased equity strategies sustained widespread losses with the Long-Short Equity Group down -3.75% in January.

Specialty Strategies were down -4.28%, largely attributable to emerging managers losing -6.16%. The Market Neutral Group declined by -1.23%.

January’s Index currently includes 1,011 constituent funds. Final results will be released in March. 

Meanwhile, the Greenwich Composite Investable Index, which is comprised of 52 funds, returned -2.45%, closely tracking the GGHFI performance.


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Editor's Note