Hedge funds returns increase

While equity markets have shown little signs of rebounding, hedge fund strategies considerably improved their performance last month.
FEB 17, 2009
While equity markets have shown little signs of rebounding, hedge fund strategies considerably improved their performance last month. The Credit Suisse/Tremont Hedge Fund Index, which tracks more than 5,000 hedge funds, was up 1.09% in January, a period in which the Standard & Poor’s 500 stock index and the Dow Jones Industrial Average were both down roughly 11%. Its latest performance is the first time since May 2008 that the Credit Suisse/Tremont Index finished in positive territory. The returns were led largely by convertible arbitrage hedge fund strategies, which returned 5.72% in January, according to Credit Suisse/Tremont. The turnaround in this sector was driven by somewhat-improved credit markets, and more “buying interest in the space,” Oliver Schupp, president of New York-based Credit Suisse Index Co. Inc., said in a statement. These convertible arbitrage strategies had experienced a 31.59% loss last year. That made them the second-worst-performing hedge fund strategy tracked in the index. Only equity market neutral hedge funds lost more in 2008, posting a 40.32% drop in performance. In January, however, equity market neutral funds were up 1.14%. Of the 10 different types of hedge fund strategies incorporated into the Credit Suisse/Tremont Index, seven sectors finished in positive territory. After convertible arbitrage strategies, dedicated short bias hedge funds and global macro hedge funds were the top two performers last month, returning 3.69% and 2.33%, respectively.

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