January’s return was down slightly from the 1.80% increase notched by the Index in December (See MSCI Hedge Composite December Falls Short of November Showing ). Earlier, MSCI had projected an increase of 1.5% with 62% of the hedge funds in the composite reporting (See MSCI Hedge Fund Composite Gain Slows Slightly ).
The composite’s January return figures were only slightly lower than the MSCI World Equity Index, up 1.60% in December. By comparison, the World Sovereign Debt Index had a return of 0.37% for the month.
Specialist Credit had the highest return in January, up 2.48%. Specialist Credit contains those funds that seek to lend to credit-sensitive issuers. This was followed by a 2.15% gain for the Multi-Process Group Index – an index containing funds which use strategies in which a single investment process does not account for more than 80% of their risk capital. Security Selection – those who combine long positions and short sales with the aim of benefiting from their ability in selecting investments while offsetting systematic market risks – had a 1.97% January gain.
The two indices that posted increases of less than 1% were the Relative Value Index and the Directional Trading Index, with returns of 0.94% and 0.86%, respectively. Relative Value is the index focused on spread relationships between pricing components of financial assets or commodities, while Directional Trading focuses on strategies based upon speculating on the direction of market prices of currencies, commodities, equities, and bonds in the futures and cash markets.
The MSCI Hedge Fund Indices are composed of more than 190 indices and the MSCI Hedge Fund Indices now includes over 1,700 hedge funds.