Hedge Funds fall in June but outperform major indices

July 12th, 2010
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Hennessee Group LLC has release its latest figures for hedge fund performance during the month of June. The Hennessee Hedge Fund Index, an equally-weighted average of over 1,000 funds, dropped -1.35% overall last month. Investor concerns over sovereign debt in Europe and a global economic slowdown continued to affect hedge fund performance, particularly long/short equity and global/macro strategies. Hennessee’s co-founder Charles Gradante commented, “The rebound from the worst recession since the 1930s faces added risks from Europe’s debt crisis causing managers to remain intently focused on Europe.” He added that “Managers question the ability of some EU governments to bail out their banks when they are having difficulty funding sovereign debt.”

Hennessee’s Long/Short Equity Index fell -1.70% last month, reflecting investors’ doubts regarding domestic unemployment as well as the slowing global economic recovery and Europe’s financial woes. The Russell 2000 declined -7.9% in June with a particularly negative impact on small cap stocks. Mr. Gradante stated that many hedge fund managers are most concerned with “what the true values of stocks are in an environment where most developed countries have insurmountable debt with a sovereign default being a real possibility and not just speculation.” The Hennessee Global/Macro Index suffered similarly last month for the same reasons, falling -1.10%.

The Hennessee Arbitrage/Event Driven Index, however, performed relatively well in June. Although it dropped -0.67% last month, the Index still remains up +3.21% year-to-date and several arbitrage strategies, including credit market strategies and investment-grade and high-yield bonds, remain positive. Hennessee’s Merger Arbitrage and Convertible Arbitrage Indices advanced +0.49% and +0.42% in June respectively. However, distressed debt funds suffered and the Hennessee Distressed Index declined -2.30%.

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Related Article Tags: Multi-Strategy, Long Short, Equity, Debt and Global Macro Hedge Fund News


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