HEDGE FUNDS SHINE THROUGHOUT BEAR MARKET - 09/04/02
NASHVILLE, TN, USA, September 4, 2002 ?o Â¡Â§During the current 28-month bear market, from April 1, 2000, through July 31, 2002, while all major equity indices have plunged, hedge funds not only have kept the bear at bay, but have made money,Â¡Â¨ said George Van, Chairman of Van Hedge Fund Advisors International, Inc., a leading hedge fund advisory firm.
Â¡Â§Since the end of the first quarter of 2000, the major equity indices have declined approximately as follows: the S&P 500, Â¡V37%; the NASDAQ, Â¡V71%; the Dow Â¡V17% and the Average Equity Mutual Fund (Â¡Â§AEMFÂ¡Â¨), -36%. By contrast, in this horrible market, the average U.S. hedge fund has produced a profit of 3.3% net while the average offshore hedge fund has gained 1.9% net.
Â¡Â§This is still another in a long series of statistics which show clearly the protection hedge funds provide investors in bad times, as well as outperforming equity mutual funds and the equity markets over time. From January 1, 1988, through June 30, 2002, the Van Hedge Fund Index shows that hedge funds have provided almost triple the total returns of equity mutual funds and double those of the S&P 500, with less risk. In this period, the total return of U.S. hedge funds, the AEMF and the S&P 500, are: 954% for hedge funds, 284% for the AEMF and 469% for the S&P 500. Similarly, hedge fund risk, as measured by the Sharpe ratio, finds hedge funds with a Sharpe ratio of 1.35 versus 0.37 for the AEMF and 0.57 for the S&P 500,Â¡Â¨ states Van.
Â¡Â§The excellent bear market performance of hedge funds has accelerated the demand for them throughout the world Â¡V a demand thatÂ¡Â¦s moving them from the shadows to the stock markets of the world. They are now being listed on various European exchanges and, in the U.S., are being offered in closed-end mutual funds.Â¡Â¨
Â¡Â§However, notwithstanding all the evidence demonstrating that hedge funds have better returns and lower risk than stocks and mutual funds, surveys show that the majority of qualified investors still say they do not know enough about them and believe them to be more risky than other investments. While this perception is being corrected over time, it is changing slowly. When reality sets in, the potential market for hedge funds will be huge compared to today.Â¡Â¨
A global hedge fund consultancy, Van Hedge Fund Advisors International, Inc. assists institutions and individuals worldwide in constructing hedge fund portfolios.
[The CompanyÂ¡Â¦s hedge fund index information is based on information received (and not audited or independently verified) from the hedge funds in an affiliateÂ¡Â¦s databases and may not be representative of all hedge funds. Hedge fund returns are net of fees and performance allocations. The timing of the deduction of such fees and performance allocations may affect the reported performance. Different statistics may be based on different numbers of funds. Averages are not dollar-weighted. Past results are not necessarily indicative of future performance. AEMF based on data provided by Morningstar.]