Hedge funds sat out March stock rally

Hennessee index gained 1.4%, compared with an 8.5% gain by the S&P 500

Apr 8, 2009 @ 10:28 am

By Jeff Benjamin

The March stock market rally left hedge funds in the dust, according to the latest report from Hennessee Group LLC.

The Hennessee Hedge Fund Index gained 1.4% in March for a three-month gain of 1.1%.

This compared with an 8.5% gain by the Standard & Poor’s 500 stock index over the same period.

The S&P 500 was down 11.7% over the first three months of the year.

The Barclays Aggregate Bond Index gained 3.3% in March and was virtually flat in the first quarter of the year, with a 0.1% gain.

Hedge funds lagged in March because the stock market rally involved no change in the underlying fundamentals, according to Charles Gradante, co-founder of New York-based Hennessee Group.

“Most hedge funds were caught with tight net exposures and were unable to participate in the rally,” he said in a statement.

“Managers were also hurt as the sectors they have been heavily short, such as financials, consumer discretionary and materials, were the sectors that rallied the strongest.”

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