Specialist Credit Leads MSCI Hedge Composite to November Hike

December 23, 2003 (PLANSPONSOR.com) - The MSCI Hedge Fund Composite Index posted a November increase of only 0.72%, a significant drop from October's nearly 2% hike.

Based on final November figures, the Composite’s gain is less than half the 1.94% advance turned in the month before. The Composite underperformed the MSCI World Equity Index, up 1.38%.  For the year, the Composite index is at 12.65%, a relatively meager figure in comparison to its World counterpart’s return of 23.20%, according to a MSCI news release.

Although performing worse than the World Sovereign Debt Index, which had a return of 1.67% for the month, the Composite index is still better for the year since the World Sovereign Debt Index has now returned only 10.64%.

Hedge Fund Indices

Performance was relatively weak for the month, with only two indices reporting returns greater than 1%, and one with negative returns.  The highest November return came from the Specialist Credit Index, which reported an increase of 1.46%.  Specialist Credit, funds that seek to lend to credit-sensitive issuers, had a year-to-date return of 20.69%.

The other index recording a return over 1% was the Security Selection Index, which reported a 1.09% advancement in its funds.  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, have a year-to-date return of 16.68%.

The two indices that posted increases of less than 1% were the Relative Value Index and the Multi-Process Group Index, posting monthly returns of 0.53% and 0.94%, respectively. Relative Value’s year-to-date, for the index focused on spread relationships between pricing components of financial assets or commodities, is now 6.35%.  Multi-Process, strategies in which a single investment process does not account for more than 80% of their risk capital, has now returned 15.93% year to date.

Rounding out the index list was a decrease of 0.27% recorded by the Directional Trading Index. Directional Trading, strategies based upon speculating on the direction of market prices of currencies, commodities, equities, and bonds in the futures and cash markets, is up 7.54% year to date. 

The MSCI Hedge Fund Indices are composed of more than 190 indices. More than 1,800 hedge funds have agreed to participate in the database and there are over 1,600 hedge funds currently in the MSCI Hedge Fund Indices and Database.