WEST PALM BEACH, FL (www.hedgeco.net) – Hedge fund returns in 2005 may not match the achieved returns for 2004 according to hedge fund analysts. Even as many expect improving hedge fund returns forthe rest of 2005. Part of the problem is traced to poor returns posted by hedge funds during the first half of the year. Most hedge funds posted between 1 and 2 percent gains during the first half of2005.
Many hedge fund analysts believe that the economic outlook for the markets will improve during the second half of 2005. But they also project that hedge fund returns for 2005 will fall short of the achieved returns in 2005 by about 1 to 2 percentage points. Last year, the average hedge fund realized gains of between 7 and 9 percent.
Jaakko Karki, chief investment officer at UK-based Attica Alternative Investments said, “March to May this year was a difficult period for hedge funds resulting in a negative return of 1 percent on average over the period. ” He added, “Since late May, market conditions have been normal and the next six months are likely to be much better, but given the first five months, average hedge fund returns are likely to be less than last year, perhaps in the region of 5 to 7 percent.” During the first six months of 2004, hedge funds achieved between 2.5 and 3.5 percent for their investors.
Another manager, Gary Vaughan-Smith, head of alternative investments at ABN AMRO believes hedge funds may achieve between 5 and 7 percent gains in 2005. Vaughan said, “But it could change. We’ve had reasonably strong equity markets recently … You could get a burst of performance and that could take returns nearer to those we had last year.”
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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