Blackenterprise.com – Resurgent long/short equity hedge funds helped the Credit Suisse/Tremont Hedge Fund Index to a 0.57% return for April, though drawdowns from earlier months continued to weigh on the index, which remained at negative 1.45% for the year.
"Despite concerns, hedge funds showed resilience for the month, quickly adjusting to changing market conditions and capitalizing on key opportunities arising from the first quarter," said Oliver Schupp, president of Credit Suisse Index Co. Inc., in a statement accompanying the index figures. "Market uncertainty does persist however, as concerns over rising inflation continue to plague economies worldwide."
Returns in long/short equity, which gained 2.2% in April, came from stronger-than-expected earnings in the financial and retail sectors, as stock prices rose and volatility declined, according to Mr. Schupp. But like the index as a whole, long/short equity still has some way to go before moving into positive territory for the year. Year-to-date the strategy was down 1.99%; last month, long/ short managers lost 2.06%.
The end of the first quarter may have signaled a changing of the guard for the strategies that led performance in the early months of 2008. Dedicated short bias funds enjoyed big months in January and March, when they gained 5.7% and 4.86%, respectively, but short sellers suffered a staggering 7.3% drawdown in April as equities markets found their footing. For the year through April short- biased funds were still up 1.81%.
Managed futures, another strategy that outperformed early in the year, posted its second-straight month of losses, down 2.15% in April after a 0.53% loss in March. Year-to-date managed futures funds were still up 8.05% and remained the best-performing strategy in the index. Global macro, despite losing 1.59% in April and 1.7% in March, also has been one of the top strategies so far in 2008, up 5.19% year-to-date.
Arbitrage strategies did relatively well in April, slimming their year-to-date losses. Fixed-income arbitrage funds gained 2.07% for the month, after losing 6.43% in March, and were down 4.85% year-to- date. Convertible arbitrage funds were up 1.11% in April, following a 5.93% decline the previous month, and those funds were down 6.62% year-to-date.
Other strategies also posted modest gains. Multi-strategy funds were up 0.66% in April, and remained negative 3.29% year-to-date. Event-driven funds were up 0.31% and were down 2.81% year-to-date. Emerging markets funds, up 0.17% in April, were down 4.04% for the year; and equity market neutral increased 0.31%, bringing that strategy’s year-to-date return to 2.1%.
