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FAIRFIELD, Iowa, July 15, 2008– Although hedge funds declined 1.33% in June according to the Barclay Hedge Fund Index compiled by BarclayHedge, they have significantly outperformed stock market returns during the first six months of 2008.
While the Barclay Hedge Fund Index slipped 2.09% from January through June, the S&P 500 Index lost 11.91% and the NASDAQ fell 13.55% over the same period.
“Hedge funds typically outperform equity markets during difficult periods,” says Sol Waksman, founder and president of BarclayHedge.
“For example, during the three-year bear market from 2000 to 2002, the S&P 500 lost 36.70 percent of its value while hedge funds actually gained 21.48 percent.
“People focusing on recent hedge fund declines have lost sight of the bigger picture – these investments actually add more value during down market cycles than in up markets. After all, when the market is going up, there isn’t as much need to be hedged.”
The Barclay Equity Short Bias Index gained a remarkable 11.83% in June. Short sellers are now up 18.76% for the year.
“Thus far in 2008, shorting the equity markets has clearly been the most profitable strategy for hedge fund managers,” says Waksman.
“Whether they can hold on to these gains remains to be seen. Going short is a strategy that can come back and bite you when the markets turn quickly.”
In addition to the strong performance by Equity Short Bias, Equity Market Neutral was up 2.86% in June, and the Healthcare & Biotechnology Index rose 1.91%.
Twelve of Barclay’s 18 hedge fund indices lost ground in June. The Emerging Markets Index dropped 4.15%, Equity Long Bias was down 3.39%, and Pacific Rim Equities lost 2.98%.
After two quarters, the worst performing indices are Emerging Markets, down 9.39%, and Pacific Rim Equities, down 5.86%.
The Barclay Fund of Funds Index lost 0.69% in June, and is down by 2.51% for the year.
Click here to view five years of Barclay Hedge Fund Index data, or download 11 years of monthly data.
Sol Waksman is an experienced media source, providing perspectives on hedge fund and managed futures trends. For more commentary or background, call 641-472-3456 or email swaksman@barclayhedge.com.
BarclayHedge (formerly The Barclay Group) was founded in 1985 and actively tracks more than 6,800 hedge funds, funds of hedge funds, and managed futures programs. Barclay has created and regularly updates 18 proprietary hedge fund indexes and eight managed futures indexes.
Institutional investors, brokerage firms and private banks worldwide utilize Barclay’s data as performance benchmarks for the hedge fund and managed futures industries.
