February’s initial numbers, based on 61% of the funds reporting, are slightly lower than January’s final return of 1.34% (See MSCI Hedge Fund Index Starts Year Higher ). However, the index continued to outperform the MSCI World Equity Index, which sustained its decent in February, down 1.9%, according to a MSCI news release.
Sum of the Parts
As has been the story for the past couple of months, Directional Trading, those strategies based upon speculating on the direction of market prices of currencies, commodities, equities, and bonds in the futures and cash markets, was February’s best performing process group, up 2.9%.
Other gainers were Relative Value, Specialist Credit and the Multi-Process Group Indexes:
- Specialist Credit was up 1%
- Relative Value increased by 0.7%
- Multi-Process Group was better by 0.2%
The only decrease of the Composite’s quintet of components was seen in the MSCI Security Selection Index down 0.6%, based on 63% of funds reporting. Security Selection managers combine long positions and short sales with the aim of benefiting from their ability in selecting investments while offsetting systematic market risks.
The MSCI Hedge Fund Indices are composed of more than 160 indices. More than 1,700 hedge funds have agreed to participate in the database and there are over 1,100 hedge funds currently in the MSCI Hedge Fund Indices and Database.The performance figures for February are based on the returns of funds that have reported through March 13, 2003.