Van Global Hedge Fund Index Falls -0.1% Net in January; Hedge Funds Limit Losses amidst Much Worse Month for Stocks.NASHVILLE, Tenn. -- The Van Global Hedge Fund 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" Index lost -0.1% net of fees in January 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. an updated report released today by hedge fund consultant Van Hedge Fund Advisors International, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control (VAN). The Index, one of the hedge fund industry's longest running benchmarks, represents the average reported monthly net return of hedge funds following a broad range of investment strategies. The Van U.S. Hedge Fund Index, which includes only those funds domiciled dom·i·cile n. 1. A residence; a home. 2. One's legal residence. v. dom·i·ciled, dom·i·cil·ing, dom·i·ciles v.tr. 1. in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , lost -0.6% net in January. Hedge funds domiciled outside the U.S., however, started the year off better as the Van International Hedge Fund Index posted a 0.4% net gain. (The Van International Hedge Fund Index was previously referred to as the Van Offshore Hedge Fund Index.) Hedge Funds vs. the Markets "January was a tough month for the stock market, reminding investors of the importance of a hedged portfolio Hedged portfolio A portfolio consisting of a long position in the stock and a long position in the put option on the stock, so as to be riskless and produce a return that equals the risk-free interest rate. ," noted George Van, Chairman of VAN. "Concerns over interest rate hikes and disappointing earnings reports contributed to a -2.4% loss for the S&P 500 last month. Hedge funds, on the other hand, benefited from their short positions and their use of low-correlation investment strategies, keeping losses to a minimum overall. In fact, about 53% of the hedge funds in our Global Index reported a net gain for January and 88% beat the S&P 500 for the month." Hedge fund managers faced unfriendly markets outside the U.S. as well. The 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. Equity Index dropped -2.3% in January while the Dow Jones Dow Jones the best known of several U.S. indexes of movements in price on Wall Street. [Am. Hist.: Payton, 202] See : Finance Europe Stoxx STOXX A series of market indexes that are representative of the European and global markets. These indexes cover a wide range of market segments including the broad market, blue chips, individual sectors and global indexes. 50 fell -2.8%. Hedge funds have a history of capital preservation, and even growth, during stock market sell-offs. Since its inception in 1988, the Van Global Hedge Fund Index has posted a positive return every year, including those years when the broad market dropped. Performance by Strategy Group Hedge fund performance was split in January, with two of VAN's four broad global strategy groups showing a loss, one posting a gain, and one flat for the month. The Specialty Strategies Group gained 0.8% net as constituent CONSTITUENT. He who gives authority to another to act for him. 1 Bouv. Inst. n. 893. 2. The constituent is bound with whatever his attorney does by virtue of his authority. strategies such as 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. and Income fared well. The Market Neutral Group was largely unaffected by the January sell-off, posting a flat return. The Long/Short Equity Long/Short Equity A hedge fund strategy that involves buying certain stocks long and selling others short. There usually isn't a restriction on the country that the stocks trade in either. Group lost -0.4% net and the Directional Trading Directional Trading A general term referring to the strategy used by investors that open positions, either long or short, on the belief that they are able to correctly predict the movement of price in a security. Notes: Simple investing. Group, weighed down by losses among Futures strategy funds, fell -2.1% net. Performance by Individual Strategy Five of VAN's thirteen individual hedge fund strategy indices generated profits in January. Unsurprisingly, Short Selling, a strategy that bets on falling stock prices, had the best performance with a 2.4% net gain. Market Neutral Securities Hedging, a strategy that invests as much in long positions as short positions, came in second for the month with a 1.0% net return. Emerging Markets, Income, and Market Neutral Arbitrage arbitrage: see foreign exchange. arbitrage Business operation involving the purchase of foreign currency, gold, financial securities, or commodities in one market and their almost simultaneous sale in another market, in order to profit from price rounded out the winners with January net gains of 0.9%, 0.8%, and 0.1%, respectively. Among the eight strategy indices that fell last month, Futures posted the largest loss, a net return of -3.2%. Aggressive Growth, a long/short equity strategy that focuses on earnings-sensitive growth companies, fell -2.3% net. All other losing Global strategy indices fell from -0.1% net to -0.3% net. This month, VAN introduced a new strategy index, Event-Driven. This strategy invests in the equity and/or fixed income of companies involved in unusual events such as bankruptcies, mergers, divestitures, and earnings surprises. This new strategy index combines two previous strategy indices, 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. and Special Situations. Those indices continue to exist as sub-strategy indices in the Event-Driven category. VAN also calculates four sub-strategy indices within the Market Neutral Arbitrage strategy. Convertible Arbitrage Convertible Arbitrage An investing strategy that involves the long position on a convertible security and a short position in its converting common stock. Notes: , the most widely utilized type of arbitrage among hedge funds, lost -0.8% net in January. Statistical Arbitrage Statistical Arbitrage A profit situation arising from pricing inefficiencies between securities. Investors identify the arbitrage situation through mathematical modeling techniques. , however, gained 1.1% net. Fixed Income Arbitrage Fixed-income arbitrage is an investment strategy generally associated with hedge funds, which consists of the discovery and exploitation of inefficiencies in the pricing of bonds, i.e. instruments from either public or private issuers yielding a contractually fixed stream of income. and Merger Arbitrage Merger Arbitrage A hedge fund strategy with which the stocks of two merging companies are simultaneously bought and sold to create a riskless profit. Notes: A merger arbitrageur looks at the risk of the merger deal not closing on time or at all. also had positive returns, earning 0.9% net and 0.3% net, respectively. January Index Value The Van Global Hedge Fund Index declined to a value of 12,373.78 in January. The Index had an initial value of 1,000 at the beginning of 1988. Over its 17 year and 1 month history, the Index has generated a net compound annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. return of 15.9%, compared to a 12.2% compound annualized return for the S&P 500. Past performance of the Van Global Hedge Fund Index may be viewed at www.hedgefund.com. Final January returns for the Van Hedge Fund Indices will be calculated at the end of January, after additional funds have submitted their returns to VAN. Those results will supercede Verb 1. supercede - take the place or move into the position of; "Smith replaced Miller as CEO after Miller left"; "the computer has supplanted the slide rule"; "Mary replaced Susan as the team's captain and the highest-ranked player in the school" the returns reported herein. Final January returns for the Van Hedge Fund Indices will be posted at www.hedgefund.com when they become available. As currently calculated, January 2005 returns for the Van Hedge Fund Indices are shown below. (Funds in the Global Index are an aggregate of funds from both the U.S. and International Indices.)
Van Hedge Fund Indices, January 2005
----------------------------------------------------------------------
Global U.S. International
------------- ------------- -------------
Market Neutral Group 0.0% -0.1% 0.1%
----------------------------------------------------------------------
Event-Driven -0.1% -0.1% -0.1%
----------------------------------------------------------------------
Distressed Securities 0.4% 0.4% 0.4%
----------------------------------------------------------------------
Special Situations -0.3% -0.3% -0.4%
----------------------------------------------------------------------
Market Neutral Arbitrage 0.1% -0.1% 0.2%
----------------------------------------------------------------------
Convertible Arbitrage -0.8% -0.8% -0.9%
----------------------------------------------------------------------
Fixed Income Arbitrage 0.9% 0.6% 1.1%
----------------------------------------------------------------------
Merger Arbitrage 0.3% 0.3% 0.3%
----------------------------------------------------------------------
Statistical Arbitrage 1.1% 0.1% 1.6%
----------------------------------------------------------------------
Long/Short Equity Group -0.4% -1.4% 0.6%
----------------------------------------------------------------------
Aggressive Growth -2.3% -3.3% -1.1%
----------------------------------------------------------------------
Market Neutral
Securities Hedging 1.0% -0.4% 1.7%
----------------------------------------------------------------------
Opportunistic -0.3% -0.9% 0.4%
----------------------------------------------------------------------
Value -0.1% -1.0% 0.8%
----------------------------------------------------------------------
Directional Trading Group -2.1% -1.8% -2.3%
----------------------------------------------------------------------
Macro -0.1% -0.7% 0.2%
----------------------------------------------------------------------
Market Timing -0.2% -0.2% -0.1%
----------------------------------------------------------------------
Futures -3.2% -2.4% -3.8%
----------------------------------------------------------------------
Specialty Strategies Group 0.8% 1.1% 0.5%
----------------------------------------------------------------------
Emerging Markets 0.9% 1.4% 0.7%
----------------------------------------------------------------------
Income 0.8% 0.8% 0.8%
----------------------------------------------------------------------
Multi-Strategy -0.1% 0.1% -0.2%
----------------------------------------------------------------------
Short Selling 2.4% 3.0% 1.4%
----------------------------------------------------------------------
Van Hedge Fund Index -0.1% -0.6% 0.4%
----------------------------------------------------------------------
Van Hedge Fund Advisors International, LLC ("VAN") is a global hedge fund advisory firm which constructs hedge fund portfolios for international institutions and wealthy investors. VAN bases its work on its pioneering research on hedge funds begun in the early 1990s and by drawing on one of the world's largest hedge fund databases. The Company's hedge fund index information is based on information received (and not audited or independently verified ver·i·fy tr.v. ver·i·fied, ver·i·fy·ing, ver·i·fies 1. To prove the truth of by presentation of evidence or testimony; substantiate. 2. ) from the hedge funds in an affiliate's databases and may not be representative of all hedge funds. Hedge fund returns are net of fees and performance allocations. The timing of the deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. of such fees and performance allocations may affect the reported performance. The January Indices as reported herein were created using a sample of 873 funds (785 excluding Futures funds). Different statistics may be based on different numbers of funds. Averages are not dollar-weighted. Past results are not necessarily indicative of future performance. The Van International Hedge Fund Index was formerly named the Van Offshore Hedge Fund Index. The overall Van Hedge Fund Index results do not include the performance of Futures funds. All historical Index returns and values have been restated to exclude funds of funds. MSCI World Equity Index and Dow Jones Europe Stoxx 50 returns are U.S. dollar denominated. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion