Hedge Funds Trounce S&P, Lag Dow in 1Q02

April 15, 2002 (PLANSPONSOR.com) - In an ambivalent stock market environment, the Average US Hedge Fund returned 1.4% net of fees in the first quarter of the year, well ahead of the S&P 500 and the Nasdaq, which returned 0.3% and -5.3% respectively, but behind the Dow, which gained 4.3% over the quarter.

Figures from Van Hedge Fund Advisors International, a hedge fund advisory firm, also show that over the quarter:

  • the Average Offshore Hedge Fund increased by 1.6% net
  • the Average Equity Mutual Fund returned only 0.7%.

Winning Strategies

While over two-thirds of the hedge funds in Van’s database boasted positive returns over the quarter, the best performing strategies over this three-month period were:

  • US Emerging Markets funds, where a 4.7% increase in March brought the quarterly return to 9.2%
  • Heathcare sector funds, which were up by 5.2%
  • Offshore Emerging Market funds, which returned 5.0%
  • Short Selling strategies, which were up 4.7% over the quarter.

Among US hedge funds specializing in particular market sectors, Communication sector funds gained 2.3% net average.

Month of March

In March, 80% of the funds researched boasted positive returns.

The Average US Hedge Fund gained 2.2% net, its best month since last November, according to figures from Van. Long-biased managers, employing Aggressive Growth or Value strategies were had the strongest monthly numbers, posting returns of 3.9% and 3.8% respectively.

Van Hedge Fund Advisors’ bases its data on information received from the hedge funds in an affiliate’s databases. Hedge fund returns are net of fees and performance allocations.

The March Index was created using a sample of 824 funds. The 1Q02 Index was created using a sample of 825 funds.