Hedge Funds Falter in March

April 5, 2005 (PLANSPONSOR.com) - Hedge fund returns took a dive in March following a positive February, according to the S&P Hedge Fund Index.

The index fell 0.55% in the third month of the year, bringing the year-to-date total losses to 0.2%. The index is made up of three separate indices – the S&P Directional/Tactical, S&P Arbitrage, and S&P Event-Driven – all of which fell on the month.

The S&P Directional/Tactical fell 0.86% on the back of long/short losses that amounted to a 1.32% decline. The S&P Managed Futures, a component of the Directional index, rose 0.29% on the month. S&P pins the overall decline on uncertainty regarding Fed and inflation movement, as well as on increasing energy prices.

The S&P Arbitrage Index fell 0.52% on the month, with year-to-date returns at 0.08%. Equity Market Neutral was the only sector of this index to see positive gains on the month. Convertible arbitrage, however, saw losses on the month, along with fixed-income arbitrage.

The S&P Event-Driven Index was down 0.28% on the month, with Special Situations managers having trouble with restructuring catalyst-driven value equities, according to the company.

In  February , hedge fund returns were up 1.7%, according to S&P.