WEST PALM BEACH, FL (www.hedgeco.net) – The recovery of Hedge Funds from declining returns continues in May 2005, as the Dow Jones Hedge Fund Index made gains in its Hedge Fund portfolios. Accordingto Dow Jones data, �Five of the six hedge fund benchmarks covered by Dow Jones Hedge Fund Indexes posted gains for the month of May 2005. The merger arbitrage, equity long/short (U.S.) and eventdriven strategies gained 1.06%, 0.93% and 0.53%, respectively. The equity market neutral and distressed securities strategies gained 0.40% and 0.21%. The convertible arbitrage strategy posted a loss-2.50% for the month.�
Hedge fund returns have been declining for the most part during the first five months of 2005. Analysts blame several factors, including capacity issues and diminishing trading opportunities in the markets. But recent losses were generated by problems in convertible arbitrage strategies, resulting from widening spreads and the downgrading of the bond ratings of General Motors and Ford Motors.
On a Year-to-date basis according to Dow Jones Hedge fund Index, �four of the six indexes were up – merger arbitrage (1.34%), distressed securities (0.43%), equity market neutral (0.29%) and event driven (0.25%). The convertible arbitrage and equity long/short (U.S.) strategies were down -9.18% and -2.57%, respectively.�
Dow Jones also reported that, �On a float-adjusted basis, the Dow Jones Wilshire 5000 posted a return of 3.79% (3.90% on a full-cap basis) for the month of May 2005 reducing the YTD losses of the broad equity markets to -0.76% for 2005 (-0.87% on a full-cap basis). The Dow Jones Corporate Bond Index was up 1.66% for the month and up 1.47% for the year. The world equity markets as measured by the Dow Jones World Total Market Index gained 2.06% in May reducing its cumulative loss to -1.21% for the year.�
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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