Equity Markets Trump Hedge Funds In August

Sep 8 2009 | 9:45am ET

The Hennessee Hedge Fund Index advanced a mere 1.85% in August (17.30% YTD), trailing other major indices.

“Hedge funds continued to lag the surging equity markets, as we would expect given their short portfolios and hedges,” said Lee Hennessee, managing principal of Hennessee Group.  “Managers have opened up their exposures to benefit from the market rally.  However, given the uncertainty around the economy, most managers are looking to generate gains due to stock selection, rather than beta exposure as there is potential for a correction.”

The S&P 500 increased 3.36% for the month (12.99% YTD), the Dow Jones Industrial Average increased 3.54% (8.20% YTD), and the NASDAQ Composite Index advanced 1.54% (27.40% YTD).  The Barclays Aggregate Bond Index advanced 1.04% (4.62% YTD). 

“There was good economic news released in August, specifically housing and manufacturing data. However, our expectations for future growth and a V-shaped recovery are tempered. Government spending continues to drive demand, while the private sector has been largely absent. This dynamic is not sustainable,” said Charles Gradante, co-founder of Hennessee Group. 

Hennessee Indices

August
YTD
Long/Short Equity
1.88%
15.27%
Arbitrage/Event Driven
2.10%
19.89%
Distressed
2.58%
24.40%
Convertible Arbitrage
2.96%
34.53%
Merger Arbitrage
1.18%
6.20%
Global/Macro
1.87%
18.19%
International
1.83%
14.51%
Macro
0.83%
9.06%

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Editor's Note