HEDGE FUNDS PROFITABLE IN APRIL - 05/17/02
Hedge funds succeeded in outpacing the major stock market benchmarks last month as the Average U.S. Hedge Fund rose 0.2% net. The Dow, S&P 500 and NASDAQ fell -4.3%, -6.1 and -8.5%, respectively. April?s gain increases the year-to-date performance of the Average U.S. Hedge Fund to 1.6% net, a return that also beats the three major U.S. equity indices.
Hedge funds were generally able to hold their own during a difficult month. Of all the hedge funds included in the April Index, over 94% beat the S&P 500 for the month while 65% were profitable. Their ability to outperform when stocks fall has long been a major selling point for these investments. With the market seemingly stuck in an up-and-down trading range, accredited investors will likely continue to look to these funds to smooth out some of the volatility in their portfolios.
The variety of investment strategies pursued by hedge fund managers was a key to their success last month. According to the Van Hedge Fund Index, ten out of fourteen U.S. hedge fund strategies were profitable in April while eleven out of thirteen offshore strategies made money. As expected, Short Selling funds performed best, with the average U.S. Short Selling fund gaining 5.4% net. These funds profit from declining stock prices. Other winning strategies for April include Market Neutral-Securities Hedging, Macro, Distressed Securities and Income. Market Neutral-Securities Hedging funds have little or no net exposure to the market, which often helps them preserve capital in down markets. The latter three strategies are less equity-oriented than most hedge funds; they typically have substantial exposure to fixed income securities.
For April, the best performing strategies were U.S. Short Selling, Offshore Short Selling and U.S. Macro, which had net returns of 5.4%, 5.1% and 3.4%, respectively. Year to date through April, U.S. Emerging Markets funds lead with an average 11.2% net gain, followed by U.S. Short Selling funds and Offshore Short Selling funds, with average net returns of 10.4% and 8.4%, respectively.
Van Hedge Fund Advisors International, Inc. www.vanhedge.com firstname.lastname@example.org