U.S. hedge funds stage comeback in first quarter; Offshore (non-U.S.) hedge funds suffer setbacks.NASHVILLE, Tenn.--(BUSINESS WIRE)--May 4, 1995--Riding the wave of a buoyant U.S. stock market, U.S. hedge funds hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" as a group recovered from 1994, their worst year in recent history, posting an average first quarter 1995 gain of 3.7%, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Van Hedge Fund Advisors (formerly International Advisory Group), a leading hedge fund investment advisory firm. Outside the U.S., however, offshore (non-U.S.) hedge funds continued to weaken, hitting investors with an average loss of 1.6%. "On the whole, U.S. hedge fund managers were able to outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. offshore hedge fund managers during the first quarter of 1995 by taking advantage of the robust U.S. stock market, indicated by the unusually large 9.7% gain in the S&P 500 during the quarter," George P. Van, chairman of Van Hedge Fund Advisors, explained. "Their average gain of 3.7% during the quarter compares very favorably with the 1.1% average gain recorded for all of 1994. This recovery was dampened somewhat by their short positions and other hedging costs, so they were unable to match the 4.5% gain posted by the average equity mutual fund or the 3.8% gain recorded by the average bond mutual fund Bond mutual fund A mutual fund which primarily or exclusively holds bonds. during the same period. "However, it should be noted that over the five years ended Dec. 31, 1994, U.S. hedge funds as a group returned on average 15.3% annually to investors, while equity mutual funds returned just 9.8% annually, the average bond mutual fund returned just 6.7% and the S&P 500 returned 8.7% during the comparable period." Van Hedge Fund Advisors tracks the performance of over 750 U.S. hedge funds, which actively manage assets of $32 billion. "In the international arena, we currently follow over 500 offshore (non-U.S.) hedge funds, which actively manage assets of $48 billion," Van continued. "These offshore hedge funds continued to take it on the chin from significant declines in emerging markets worldwide, where over one quarter of their funds are invested, posting an average loss of 1.6% during the first quarter of 1995, compared to an average full year loss of 2.0% in 1994. Despite this recent negative performance, offshore hedge funds have been able to realize an average net annual gain of 15.1% for the five years ended Dec. 31, 1994." There was significant variance in the performance of differing hedge fund investment styles in the U.S. and abroad during the first quarter of 1995. First quarter 1995 returns are as follows: Aggressive Growth (U.S.: 4.1%/Offshore: 4.9%); distressed Securities Distressed Securities A company that is currently going through hard times and, as a result, the market value of its securities or assets fall substantially in value. Notes: These securities then become attractive to bottom fishers or vultures. (U.S.: 3.7%/ Offshore: 6.0%); Emerging Markets (U.S.: -8.6%/Offshore: -10.3%); Fund of Funds Fund of Funds A mutual fund that invests in other mutual funds. Notes: For example, an investor would select a general risk profile and the fund-of-funds manager would pick underlying investments from a range of products managed by external managers. (U.S.: 1.4%/Offshore: -0.9%); Income (U.S.: 1.6/ Offshore: 0.6%); Macro (U.S.: -5.0%/Offshore: -4.3%); Market-Neutral Arbitrage (U.S. 4.3%/Offshore: 2.6%); Market-Neutral Securities Hedging (U.S.: 3.3%/Offshore: 1.3%); Market Timing (U.S.: 4.0%/ Offshore: 4.3%); Opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. (U.S.: 4.3%/Offshore: 3.1%); Special Situations (U.S.: 5.0%/Offshore: 4.9%); Short Selling Short Selling The selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short. (U.S.: 0.1%/ Offshore: 2.4%); Several Strategies (U.S.: 4.9%/Offshore: NA); and Value (U.S.: 6.3%/Offshore: -0.2%). "When we combine the characteristics of our separate U.S. and offshore databases, the resulting overall database has over 1,250 hedge funds worldwide, with $80 billion in actively managed assets," Van noted. "With this database, we now provide what we believe to be the largest and the first truly representative global hedge fund index. "To help ensure the statistical validity of our research, we work closely with the faculty of the Owen Graduate School of Management of Vanderbilt University Vanderbilt University, at Nashville, Tenn.; coeducational; chartered 1872 as Central Univ. of Methodist Episcopal Church, founded and renamed 1873, opened 1875 through a gift from Cornelius Vanderbilt. Until 1914 it operated under the auspices of the Methodist Church. , who advise us on ways to further improve the accuracy of our data. In addition, we recently retained a `Big Six' accounting firm to review our database and report on the integrity of our information." A registered investment advisor Registered Investment Advisor (RIA) is a designation obtainable in the United States by an individual who has registered with the U.S. Securities and Exchange Commission or state regulatory agency (where the primary business is situated or multiple States in some cases) in , Nashville, Tenn.-based Van Hedge Fund Advisors works closely with high net worth and institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. , consulting firms Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a and plan sponsors to identify top performing hedge funds and develop customized hedge fund portfolios. -0- Note to editors: Van Hedge Fund Advisors also has available on request a Global Index that combines the performance of U.S. and Offshore hedge funds in aggregate and by investment style, over the past five years, compared to other investment benchmarks (i.e. S&P 500, MSCI World The MSCI World is a stock market index of 'world' stocks. It is maintained by Morgan Stanley Capital International. The index includes a selection of stocks of all the developed markets in the world, as defined by MSCI. ). Similar information is available for U.S. and Offshore returns. 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. 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 |
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