Hedge Funds Outperform Equities in May

June 15, 2001 (PLANSPONSOR.com) - The average US hedge fund increased by 1.5% in May while the average offshore hedge fund gained 1.2%, according to Van Hedge Fund Advisors International, Inc, a global hedge fund advisory firm.

In comparison:

  • the NASDAQ shrank by 0.2%
  • the S&P 500 gained 0.7%
  • the Dow was up by 1.9%.

In year to date terms:

  • the average US hedge fund increased by 2.9%
  • the average offshore hedge fund rose by 3.4%
  • the Dow Jones Industrial Average increased 1.9%
  • the S&P 500  retreated by 4.4%
  • NASDAQ fell by 14.5%.

Almost 60% of hedge funds outperformed the S&P 500, after April’s rally proved unsustainable. In addition, hedge funds also outperformed actively managed funds over the month, as the average equity mutual fund increased by only 0.3%.

Investment Strategy Results

Distressed Securities managers posted the highest returns in both May and year to date terms, up 5.1% over the month and rising 10.7% over the year, with last year’s subdued markets translating into more opportunities.

Value managers have also performed well so far, their funds increasing by 9.3% this year so far, selling short stocks they believe are overvalued. That strategy tends to favor smaller cap stocks, which have outperformed large caps

US Emerging Markets and Offshore Emerging Markets also performed well, returning 4.0% and 3.0%, respectively.