New York (HedgeCo.Net)- As of July 13, 2007, hedge funds have returned an average of 5.25% in the second quarter, beating first-quarter performance of 2.1%, Morningstar reported today in a press release.
Hedge funds slightly underperformed the S&P 500 Index, which returned 5.81% in the second quarter despite its loss in June. Also edging out hedge funds in the second quarter, the MSCI World Index returned 5.82%. Second-quarter performance lifted hedge funds to a year-to-date return of 7.77%, beating the S&P 500’s 6.00% year-to-date return, but the MSCI World Index outperformed both with a gain of 8.01% for the year to date. Within the second quarter, April contributed the most to hedge fund performance with a monthly average return of 2.08%.
Emerging markets continued to lead the way, despite warnings of an impending market correction, with average returns of 9.7% in the second quarter. Among those, China funds fueled strong performance, recovering from the market setback in late February. Solid energy markets in Russia and Brazil bolstered returns for many of the emerging-markets funds. Managed futures recovered from a lackluster first quarter, producing a mean total return of 6.82%, with trend-following strategies paving the way.
Rounding out the top performers, equity-net-long and equity-variable funds saw returns of 5.84% and 4.87%, respectively, benefiting from the strong equity markets. They, too, prospered from the solid energy sector and information technology. The financial sector for hedge funds continued to lag, and Japanese equities struggled slightly.
Event-driven and merger-arbitrage funds surged ahead, yielding 4.82% and 3.45%, respectively, benefiting from ongoing corporate activity. According to Thomson Financial, mergers and acquisitions increased 62% over the same period in 2006.
Despite lagging all hedge fund categories, convertible-arbitrage funds stayed in the black with average total returns of 2.66%. “Overall, all hedge fund categories produced consistent returns and continued to contribute positively to 2007 year-to-date returns. Strong economies in emerging markets and a rise in global equities pushed hedge fund returns upward for the year,” said Morningstar Hedge Fund Analyst Carey Teichman.
Morningstar has 15 categories in its database, including approximately 8,000 hedge funds and funds of hedge funds.
Alex Akesson
Editor
HedgeCo.Net
Email: [email protected]
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com.
