Average US Hedge Fund Advantage Narrows in April

The Average US Hedge Fund still outperformed major US stock indexes on a year-to-date basis, gaining 1.4% net. The Average Offshore Hedge Fund has gained 2.2% net in 2001.  The Average Offshore Hedge Fund gained 1.8% net in April.

For the month, the NASDAQ gained 15%, erasing March’s slump while the Dow closed 8.67% higher and the S&P 500 gained 7.68%.  Year to date through April 30 the Dow is 0.48% lower, while the S&P 500 is lower by 5.36% and the NASDAQ is still 14.34% lower than it began the year.

Hedge Edged

Hedge funds lagged the stock indices due to the hedges in their portfolios, including large cash positions, options and short positions.  CEO Steven Lonsdorf noted that in addition, many hedge fund managers, wary of chasing another fool’s rally, chose to remain strongly hedged throughout the month.

For April, the best performing strategies were Offshore Market Timing, US Value, and Offshore Aggressive Growth, which had net returns of 6.4%, 5.1% and 5.0%, respectively.  Year-to-date US Value Hedge Funds have posted the best net return of 6.8%, while Offshore Market Neutral-Arbitrage and US Distressed Securities have returned 5.5% and 5.4%, respectively.

Global Results

On a global basis Aggressive Growth managers fared best in April with a 4.3% net gain, the category’s best performance since last August.   The stock market turnaround was bad news for the short seller category, which tumbled 9.5%, on average.

Those results are a marked contrast from year-to-date performance for the two categories, with Aggressive Growth down 7.1%, and Short Sellers up 4.1%, on average.

Data from Van Hedge Fund Advisors is based on information received (and not audited or independently verified) from the hedge funds in its databases and may not be representative of all hedge funds.   Hedge fund returns are net of fees and performance allocations. The April Index was created using a sample of 824 funds.