The Hennessee Technology Index was May’s top performer with a return of 1.93% (-0.81% YTD) , Hennessee said in a news release. Having suffered a 3.71% drop in April, the sector bounced back as managers began to increase their risk tolerance.
The second best performer for the month was the Hennessee Financial Equities Index with a return of 0.72% (+1.66% YTD). Recent interest-rate fears caused a broad selloff in March and April but, as the initial panic settled in May, managers took advantage of undervalued stocks. In third spot was the Hennessee Fixed Income Index , posting a return of 0.26% (+2.61%YTD) .
“Hedge fund managers are calling this ‘the I.O.U. market’ (interest rates, oil, andunemployment). Positive developments on all three fronts have given hedge fund managers encouragement to increase their equity exposure,”Charles Gradante, Managing Principal of Hennessee Group, said in the announcement. “A growing number of managers believe CEOs have been conservative about 2004 earnings and that there will be surprises to the upside in the third and fourth quarters.”
The Hennessee Europe Index turned in the worst May showing, with a decrease of 2.34% (+1.13% YTD) , as the large rise in oil prices has impacted European equity markets to the extent that the European Commission is backing off from its growth forecast of 1.7% for 2004, citing the fact that estimate was based on oil at $31 per barrel. Meanwhile, the Hennessee Pacific Rim Index was the second worst performing strategy, posting a loss of 2.24% (+1.09% YTD). There, China recovered from a recent downturn but political instability in India and a general decrease in investor’s risk appetite led to selloffs in Pacific Rim countries.
The third worst performer was the Hennessee Emerging Markets Index, posting a return of -1.54% (+2.40% YTD).
The broad market indices were mixed in May, with the S&P 500 DRI Index rising 1.37% (+1.47%YTD), but the Dow Jones Industrial Average dropping 0.36% (-2.54% YTD). The NASDAQ Composite Index increased 3.50% (-0.80% YTD).