| Hedge Fund Observer: mixed results in April |
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| 14/05/2006 | |
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The Standard & Poor's Hedge Fund Index (S&P HFI) rose for a sixth consecutive month, adding 1.01% in April, bringing its year-to-date performance to 5.08%. "Rising interest rates, a skyrocketing commodity market and a benign credit market drove performance throughout the month", explained Justin Dew, senior hedge funds specialist at S&P. That, however, was not enough to beat the broad-based S&P 500 index, which rose 1.34% in April. The Hennessee Hedge Fund Index did slightly better with a +1.53% return over the month. "Hedge funds continue to outperform the S&P 500 index, with emerging markets, Asia-Pacific, and Europe leading the way," said E. Lee Hennessee, managing principal of Hennessee Group LLC. And yet, this performance was still less that the Dow Jones Industrial Average, up 2.32%. The NASDAQ was down 0.74% while the Lehman Brothers Intermediate Government Corporate Bond Index remained stable with a 0.05% return. So far in 2006, the best performing strategy index of the Hennessee Hedge Indices is the Latin America Index, up 15.86% year to date. This acts as a reminder that hedge fund manages thrive on high volatility, which had somewhat disappeared from the market in 2005, leading to poor hedge fund performance. Hennessee stated that "populist leaders in South America, particularly Bolivia, spooked investors with their nationalization programs." Given the likelihood of further leftist political leaders in countries such as Peru and Ecuador and the political stance of most current Latin American heads of government, the future certainly bodes well for this strategy. J.L. |
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