Hennessee: Hedge Funds Drop in April

May 10, 2004 (PLANSPONSOR.com) - Persnickety investors concerned about a possible rise in interest rates led hedge funds 0.78% lower in April.

“Hedge fund managers have indicated concern as to whether an upward move in interest rates will be offset by earnings expansion that exceed the market’s expectation for the third and fourth quarters ,” said Charles Gradante, Managing Principal of Hennessee Group LLC. April’s decline brought the composite Hennessee Hedge Fund Index’s year-to-date return to 2.54%, according to a news release by the hedge fund group.  

Leading the charge was the Hennessee Latin America Index suffering an onomatopoeic crash of 7.54% in April, to turn in the month’s worst performance.   Hennessee attributed the sudden loss to many investors dumping their riskier Latin American assets as the Argentine government announced it will raise pension payouts and wages for low-income state workers. Furthermore, Brazil’s debt reached 57% of GDP, far above the historic average of 35%.   For the year, the Latin American measure has lost 5.23%.  

The Hennessee Technology Index was the second worst performing strategy, with a decrease of -3.38% in April, followed by a -2.74% drop in the Hennessee Financial Index, due to the aforementioned anticipation of a rise in interest rates.

On the other end of the scale was the Hennessee Short Biased Index’s 8.43% return, a complete reversal for the measure after turning in March’s worst performance.   For the year, the Index is now on the positive side, with a 6.63% return.  

The second best performer for the month was the Hennessee Distressed Index, with a return of 1.63% followed by the Hennessee Fixed Income Index, posting a return of 0.68%.