Less than half of the funds in the April Index, 41%, posted a positive return for the month, VAN said in a news release.
The Van Global Hedge Fund Index, excluding Funds of Funds, also gave back 1% net last month. The Van U.S. Hedge Fund Index, which includes only U.S.-domiciled funds, lost 1.3% net in April, while the Van Offshore Hedge Fund Index, which features only non-U.S.-domiciled funds, gave up 0.8% net.
For the year, the Van Global Hedge Fund Index has gained 2.3% net, ahead of all major equity indices, which range from NASDAQ’s 4% loss to the small-cap Russell 2000’s 0.8% gain. The Lehman Brothers Aggregate Bond Index is flat for the year to date ,while the Average Equity Mutual Fund has returned a slight 0.2% gain.
The Directional Trading Group was clearly the hardest hit by April’s hostile markets, falling 4.5% in the Global Index. The Directional Trading Group consists of Futures, Emerging Markets, and Market Timing strategy hedge funds, all of which saw losses for the month.
Unsurprisingly, the Market Neutral Group fared best, gaining 0.1% net. That group, which consists of Market Neutral Arbitrage, Distressed Securities, and Special Situations strategy funds, was the only one of the four Strategy Group Indices to post a gain. The two other Strategy Group Indices, Long/Short Equity and Specialty Strategies, fell 1.7% net and 1.3% net, respectively. For the year to date, all four Strategy Group Indices are positive, led by the Market Neutral Group’s 2.8% net advance.
Among the fifteen individual strategies tracked by VAN, Futures fared worst by far in April, plummeting 6.9% net on a Global basis. Those funds, which often use quantitative systems to invest in financial derivatives, commodities, and currencies, can be volatile and were particularly impacted by last month’s rising interest rate environment.
Emerging Markets, one of the Global Index’s strongest performers in prior months, fell 3.3% net in April. Short Selling, on the other hand, had the best return in the Global Index, rising 3.6% net. Such funds are typically used to help offset losses in the remainder of investors’ holdings during periods of market stress.
The only other winning strategies for last month were Distressed Securities, Income, and Market Neutral Arbitrage, which posted net gains in the Global Index of 1.4%, 0.4%, and 0.2%, respectively. For the year to date, Distressed Securities leads all strategies with a 6.2% net gain, followed by Emerging Markets at 3.5% net and Value at 2.5% net.
The April Index return is based on the net returns of over 800 funds.