May’s top performance was turned in by the Hennessee Telecom and Media Index with a return of 10.22%, as investors looking to actively participate in the market rally went to high beta/high growth stocks and the anticipation of the easing of rules governing media company mergers helped buoy returns. Year-to-date the Telecom index is up 14.98% and the overall Hennessee Index has returned 7.78%, according to the Hennessee Hedge Fund Group.
The second best performer for the month was the Healthcare and Biotech Index, with a return of 9.57%. Biotech mostly drove this index as many companies reported favorable progress on their cancer fighting medicines . Further, May’s return helped to pad its 15.18% positive performance in 2003.
In third place was the Growth Index, posting a return of 6.25% for May boosted by the large NASDAQ increase and increased growth equity allocations . Year-to-date the index is up 8.20%.
Not All Rosy
For the second month in a row (See Hedge Funds Track Higher in April, Short Bias Bashed ), the Short Biased Index was the worst performer, posting a negative 3.33% return in May. Short biased hedge fund managers were experiencing difficulty making money on their shorts as the market rallied across the board and valuations increased on speculation and the search for beta, not fundamentals. For the year, the index is down 9.44%.
The only other component of the Index to post a negative return in May was the Regulation-D Index, with a loss of 0.44%. Otherwise, the index’s numbers kept pace with the broader market indices: the S&P 500 Index was up 5.25%, the Dow Jones Industrial Average 4.37% higher and the Nasdaq Index up 8.99% in May.