Indices Show Strong February For Hedge Funds

Mar 10 2008 | 4:41pm ET

Hedge funds bounced back in a big way last month, according to a pair of indices.

The average hedge fund rose 2.93% in February, according to, and 1.77%, according to the Hedge Fund Research.

“February hedge fund returns were supported by very strong moves in commodity prices virtually across the board, a bounce back in emerging markets and savvy short exposure from long/short equity managers,” HFN said.

Certainly, CTA and managed futures managers enjoyed the month, as the strategy returned 8.95% on the month, according to HFN. That was more than twice the return of the second-best strategy, global, which added 3.77 %. Emerging markets returned 3.6%.

“There appears to be a growing divergence in hedge fund returns between those funds caught in the middle of the credit market’s troubles and those benefiting from the environment created by attempts to solve the issues,” HFN said. “Commodity-focused managers are off to their best start in 10 years and are benefiting greatly from U.S. monetary policy which is more focused on liquidity than limiting inflation.”

Other strong performers, according to HFN, included macro funds, which rose 3.41%, the energy sector, up 2.65%, and Asia funds, up 2.51%.

Only two HFN averages were in negative territory last month: Convertible arbitrage funds shed 2.74%, while distressed funds were down marginally, losing 0.08%.

Macro funds topped HFR’s HFRX Strategy Indices, adding 8.54% (up 12.68% year-to-date). And while all but three HFRX strategies were in the black last month, all but two remain mired in the red year-to-date (merger arbitrage is up 0.01% in 2008 after a 0.66% return last month).

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