Kiwi Hedge Fund Index Up 12.4%

Oct 17 2008 | 11:06am ET

Think all hedge fund indices are taking a dive this year? It might be time to take a look a little further Down Under.

The Ernst & Young New Zealand Absolute Return Index, launched just over a year ago by New Zealand Absolute Return Association, is up 3.86% in September, while hedge funds worldwide were losing more than 6% on average.

While NZARA chairman Anthony Limbrick admits that the index is narrow, with initially just seven constituent managers, he says it represents a cross-section of the global industry, with global equities, trend-following, long volatility and commodities all represented.

Since the index started in July 2007 it has returned more than 25%, and its performance over the first nine months of this year is 12.4%.

“Considering most indices are struggling to post gains on a year-to-date basis, or are now substantially lower than where they were on Dec. 31, we are quite satisfied with the performance of the index,” Limbrick says.

The Ernst & Young New Zealand Absolute Return Index is based on the principle of simple averages. Each of the seven constituent managers submits an NZARA Average of the performances of all their funds open to new money. This collection of simple averages is compiled again as a simple average to create the index.

Ernst & Young compiles the index but is not a verification agent and does not guarantee the veracity of the performance numbers submitted by the constituent managers.

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