Hennessee: Hedge Funds Up 1.24% In July

July’s top performance was turned in by the Hennessee Financial Equities Index with a return of 3.24%, as investors capitalized on record high mortgage activity, strong fixed income issuance and the rising tide of trading volume. Year-to-date the Equities Index is 19.63% better and the overall Hennessee Index has returned 10.23%, according to the Hennessee Hedge Fund Group.

The Telecom and Media Index was July’s second best performer with a return of 3.20%, as investors hedged their bets against the recent downturn that hurt the high beta stocks. Further, July’s returns helped to pad the index’s impressive 20.66% performance in 2003.

In third place was the Health Care and Biotech Index, posting a return of 2.86% for July boosted by a new mandate on the Food and Drug Administration (FDA) to speed up drug approval and strong Health Maintenance Organization (HMO) earnings for the second quarter of 2003.   Year-to-date the index is up 20.18%.

Some Lower

For the fourth month in a row, the Short Biased Index was the worst performer, posting a negative 1.68% return in July.   Only this month, the index was not alone at the bottom, joined there by the Fixed Income Index.    Short biased hedge fund managers were experiencing difficulty making money on their shorts as the market continued to rally across the board.   Fixed income on the other hand, felt the pinch of a sudden spike in interest rate charges.  For the year, the indices are down 14.31%.

Other components of the aggregate in July on the negative side include:

• High Yield Index – down 1.37%; up 12.98% YTD
• Macro Index – 1.24% lower; 8.25% higher YTD
• Convertible Arbitrage Index – 0.81% in the red; better by 6% YTD
• Latin America Index – down 0.58%; up 20.94% YTD
• Market Neutral Index – 0.44% lower; 0.18% lower YTD

Otherwise, the index’s numbers kept pace with the broader market indices: the S&P 500 Index was up 1.69%, the Dow Jones Industrial Average was 2.76% higher and the Nasdaq Index was up 6.92% in July.