Hedge fund recovery accelerates in second quarter.

NASHVILLE, Tenn.--(BUSINESS WIRE)--July 31, 1995--Globally, hedge funds posted strong earnings increases in the second quarter of 1995, with U.S. hedge funds edging out offshore hedge funds, according to Van Hedge Fund Advisors (formerly International Advisory Group), a leading hedge fund investment advisory firm.

"U.S. hedge funds as a group earned 6.6% net in the second quarter of 1995, compared to a gain of 3.7% in the first quarter," George P. Van, Chairman of Van Hedge Fund Advisors, explained. "U.S. Aggressive Growth hedge funds, which invest in companies with accelerating earnings, performed the best globally during the quarter, weighing in with a net gain of 11.2%.

"Significantly, U.S.-based Emerging Markets hedge funds, aided by improving market conditions in Latin America, the Asia-Pacific region and Eastern Europe, rebounded very strongly from a first quarter net loss of 8.6% to gain 9.8% on average during the second quarter," Van continued.

"Offshore hedge funds lagged their U.S. cousins, registering a second quarter net gain of 4.1%, well above their first quarter loss of 1.6%. Offshore Aggressive Growth hedge funds performed the best of all offshore funds, with a net gain of 7.4%, on top of a 4.9% gain in the first quarter.

"The weakest performing hedge fund investment styles on both sides of the Atlantic were Short Sellers and Macro hedge funds," Van observed.

"Short Sellers worldwide finally got swamped by the equity market tidal wave after having squeaked through the first quarter with small profits. U.S. Short Sellers lost 11.7%, compared with a 0.1% first quarter gain, while offshore Short Sellers also slid, turning in a loss of 7.8% during the second quarter, compared to a 2.4% first quarter net gain." He added that several prominent shortselling hedge fund managers publicly questioned the current validity of their strategies.

Van then pointed out that Macro funds worldwide, on average, improved their performance in the second quarter. "Notwithstanding continuing losses on average, half of the funds registered gains. U.S. Macro funds lost 6.7% after a first quarter loss of 5.0%. Offshore Macro hedge funds had a negative return of 0.4% during the second quarter after a 4.3% loss in the first quarter of 1995." He observed that, because of fund size exacerbating macro strategy difficulties, the Caxton Fund returned $1.3 billion to investors and George Soros announced his reduction of macro strategy use.

Van observed that, in a surging U.S. market in which even dismal company performance was rewarded by stock price increases, the short positions of hedge funds muted their earnings increases. He noted that the average hedge fund worldwide, with a 5.5% gain, underperformed the S&P 500, which returned 9.5% during the first quarter.

"Over longer periods including both weak and strong markets, the `hedge' of hedge funds has paid off strongly for their investors," he said. "Over the past 7 1/2 years ended June 30, 1995, the compound annual return of the average hedge fund, worldwide, was 17.5%, ahead of the 14.7% return of the S&P 500, the World Stock Fund Index of 10.4% and the average U.S. mutual fund return of 10.5%."

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                       Van Hedge Fund Advisors
                          Hedge Fund Returns

                             Second Quarter 1995    First Half 1995
                               U.S.   Offshore       U.S   Offshore
Aggressive Growth              11.2%     7.4%       15.8%     12.7%
Distressed Securities           5.8%     5.3%        9.7%     11.7%
Emerging Markets                9.8%     7.0%        0.4%     -4.0%
Fund of Funds                   4.3%     1.3%        5.8%      0.4%
Income                          4.1%     2.1%        5.8%      2.7%
Macro                          -6.7%    -0.4%      -11.4%     -4.7%
Market Neutral - Arbitrage      5.3%     3.3%        9.9%      6.0%
Market Neutral -
 Securities Hedging             5.1%     3.6%        8.6%      4.9%
Market Timing                   1.1%     1.1%        5.1%      5.4%
Opportunistic                   6.8%     4.4%       11.4%      7.6%
Special Situations              5.9%     4.9%       11.2%     10.0%
Short Selling                 -11.7%    -7.8%      -11.6%     -5.6%
Several Strategies              6.9%     N/A        12.1%      N/A
Value                           8.5%     6.2%       15.3%      6.0%

A registered investment advisor, Nashville, Tennessee-based Van Hedge Fund Advisors works closely with high net worth and institutional investors, consulting firms and plan sponsors to identify top performing hedge funds and develop customized hedge fund portfolios. The company maintains the world's largest actively tracked database of U.S. and Offshore hedge funds, following in excess of 1,300 funds with over $80 billion in assets. -0- Note to Editors:

Van Hedge Fund Advisors also has available on request separate Hedge Fund Indexes on the performance of U.S., Offshore and Global (U.S./Offshore combined) Funds in aggregate and by investment style, over the past five years, compared to other investment benchmarks (e.g., S&P 500, MSCI World).

Information on U.S. and offshore hedge fund performance is based on information received from hedge funds (and not audited or independently verified) in Van Hedge Fund Advisors' databases and may not be representative of all hedge funds. Information on mutual funds provided by Morningstar. Different statistics may be based on different numbers of funds. All single-year hedge fund averages represent simple averages, not dollar-weighted averages. Past results are not necessarily indicative of future performance.

CONTACT: Van Hedge Fund Advisors, Nashville

George P. Van, 615/377-2949