NASHVILLE, Tenn.–(BUSINESS WIRE)–Nov. 13, 2003–The Van Global Hedge Fund Index rose 2.5% net of fees in October, according to Van Hedge Fund Advisors International (VAN). The Index represents theaverage net return of hedge funds tracked by VAN, with the October figure based on over 800 funds. Excluding funds of funds, the Index gained 2.6% net for the month. VAN also announced Octoberresults for the Van U.S. Hedge Fund Index, which rose 2.8% net, and the Van Offshore Hedge Fund Index, which gained 2.2% net. The former includes only U.S.-domiciled funds while the latter includesonly funds domiciled outside the U.S.
Positive returns were the norm among hedge funds in October, with approximately 85% of funds in the Global Index reporting gains. The Index’s 2.5% return marked its best showing since May. Despite the upturn, however, October hedge fund gains generally lagged those of the stock market, as bullish investors resumed their buying spree after a brief pullback in September. About 16% of hedge funds managed to outperform the S&P 500’s October return of 5.7%.
“Hedge funds have averaged a gain in all but one month this year and the Van Global Hedge Fund Index has now returned 14.5% net year to date,” stated George Van, Chairman of VAN. “Although that gain is less than that of the rebounding equity markets, I think hedge fund investors are pleased with the performance they’re seeing. The hedging strategies of the funds generally allow them to outperform when the market falls, as was the case in September. On the other hand, hedge funds may underperform the broad market when it moves sharply upward, like last month. The net result over the years is that hedge funds have generated strong gains with far less volatility on average than either the stock market or equity mutual funds. Sophisticated individual investors, and increasingly institutions, appreciate the balancing effect that hedge funds can have on a portfolio.”
This year’s leading hedge fund strategy continued to set the pace in the October Global Index as Emerging Markets gained 4.9% net, boosting its year-to-date return to 33.5% net. Aggressive Growth and Value, both long/short equity strategies, averaged 4.0% net gains last month. Aggressive Growth has now earned 23.9% net year to date while Value has tallied a 19.2% year-to-date net return. Distressed Securities, another of this year’s best performers, earned 2.7% net in October, putting its year-to-date return at 22.6% net. Short Selling was the sole losing strategy last month, down -6.4% net. After double-digit gains in each of the last three years, Short Selling is on track to post its worst year in 2003 since the Index’s 1988 inception. The strategy has lost -22.2% net this year to date.
The Van Global Hedge Fund Index reached a new high value of 10,358.23 in October. The Index began with a value of 1,000 in January 1988. The Index has generated a net compound annualized return of 15.9% over its 15 year, 10 month history versus 12.2% for the S&P 500. Past performance of the Van Global Hedge Fund Index may be viewed at www.hedgefund.com.
Final October returns for the Van Hedge Fund Indices will be calculated at the end of November, based on a substantially larger sample of hedge fund returns. Those results will supersede the returns reported herein, should they differ. Final October returns will be posted at www.hedgefund.com.
As currently calculated, October and year-to-date 2003 hedge fund returns by strategy are as follows: <pre><br><br> Global U.S. Offshore<br> ———— ———— ————<br> Oct. YTD Oct. YTD Oct. YTD<br> 2003 2003 2003 2003 2003 2003<br>————————————- —— —– —— —– ——<br>Aggressive Growth 4.0% 23.9% 4.4% 24.8% 3.1% 22.6%<br>————————————- —— —– —— —– ——<br>Distressed Securities 2.7% 22.6% 2.8% 21.3% 2.5% 23.6%<br>————————————- —— —– —— —– ——<br>Emerging Markets 4.9% 33.5% 4.8% 29.8% 4.9% 34.6%<br>————————————- —— —– —— —– ——<br>Income 1.1% 7.8% 1.2% 8.3% 1.0% 7.1%<br>————————————- —— —– —— —– ——<br>Macro 2.0% 13.5% 2.8% 14.7% 1.4% 12.8%<br>————————————- —— —– —— —– ——<br>Market Neutral – Arbitrage 0.9% 6.9% 1.0% 7.1% 0.8% 6.6%<br>————————————- —— —– —— —– ——<br>Market Neutral -<br>Securities Hedging 1.2% 5.9% 1.6% 5.7% 0.7% 5.7%<br>————————————- —— —– —— —– ——<br>Market Timing 2.6% 8.9% 3.1% 9.6% 1.5% 7.9%<br>————————————- —— —– —— —– ——<br>Opportunistic 3.6% 20.6% 3.9% 23.0% 3.2% 18.2%<br>————————————- —— —– —— —– ——<br>Several Strategies 1.7% 15.0% 1.0% 17.7% N/A N/A<br>————————————- —— —– —— —– ——<br>Short Selling -6.4% -22.2% -5.5% -20.3% -7.6% -24.6%<br>————————————- —— —– —— —– ——<br>Special Situations 2.3% 15.6% 2.8% 16.9% 1.8% 14.6%<br>————————————- —— —– —— —– ——<br>Value 4.0% 19.2% 4.1% 20.3% 3.9% 17.5%<br>————————————- —— —– —— —– ——<br>Van Hedge Fund Index<br>(ex Funds of Funds) 2.6% 15.3% 2.9% 16.1% 2.3% 14.5%<br>————————————- —— —– —— —– ——<br>Funds of Funds 1.7% 9.8% 1.9% 10.8% 1.5% 8.7%<br>————————————- —— —– —— —– ——<br>Van Hedge Fund Index 2.5% 14.5% 2.8% 15.6% 2.2% 13.7%<br>————————————- —— —– —— —– ——<br></pre>
Van Hedge Fund Advisors International, Inc. (“VAN”) is a global hedge fund advisory firm which constructs hedge fund portfolios for international institutions and wealthy investors. VAN bases its work on its pioneering research on hedge funds begun in the early 1990s and by drawing on a hedge fund database which it believes to be the world’s largest.
The Company’s hedge fund index information is based on information received (and not audited or independently verified) from the hedge funds in an affiliate’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. The October Index as reported herein was created using a sample of 817 funds. Different statistics may be based on different numbers of funds. Averages are not dollar-weighted. Past results are not necessarily indicative of future performance.
