August Hedge Funds Up by a Hair

September 10, 2002 ( - Hedge funds trailed a broader stock market index by a hair in August, but managed to edge out two other equity indices for the month, according to the Hennessee Hedge Fund Index.

The August index showed a return of 0.53%, just short of the 0.60% return turned in by the S&P 500 for the month. Hedge funds beat the Dow Jones Industrial Average (fell 0.84%) and Nasdaq (which fell 1.01%), according to the index.

Year-to-date, hedge funds are down 4.28%, far better than the overall dismal performance of the US equity markets, Hennessee said. The S&P 500 is down 19.48%, the Dow Jones Industrial Average is down 13.54%, and the Nasdaq is down a staggering 32.57%. 

August was a rebound month as two of the worst returns in July, Latin America and Financial Equities, bounced back to be the two top performers in August, with respective returns of 5.55% and 2.15%, the August index showed.

Macro was the third best performer with a 1.76% return.  Conversely, the worst performing hedge fund indices during August were the Short Biased Index (last month’s best performer), down 0.97%, Healthcare/Biotech, down 0.91%, and High Yield, down 0.63%.

IMF Brazil Intervention Boosts August Return

Latin America prospered as the MSCI Brazil was up 22.76%, after falling 15.58% in July.  The IMF’s $30 billion pledge to Brazil to keep its markets solvent and the assurance of foreign banks to maintain their current level of support for the nation helped to bolster confidence.

In addition, Uruguay staved off a potential banking collapse with a $1.5 billion US bridge loan.  In the US, Financial Equities were strengthened as credit spreads tightened toward the end of the month and refinancing activity prospered as the 10-year note hit lows not seen in forty years.

In other overseas indices, the Pacific Rim index is up 1.80% for the year to date.