New York (HedgeCo.net) The second quarter was a tough one for investors as the overall market dropped sharply in the last week of the quarter to take the Dow and the S&P into negative territory for the quarter and erased the gains for the year. The indices have since bounced back, but the end of the second quarter could not have made investors happy as the weight of Greece’s debt issues and China’s market decline hit the domestic market.

The Credit Suisse Hedge Fund Index fell by 1.31% in June and that led to a 0.47% loss for the index in the second quarter. Comparatively, the S&P 500 fell 0.23% during the second quarter. Despite the decline in June and in the second quarter the hedge fund index was still up 1.99% for the year at the end of June while the S&P 500 was up a meager 0.20% on a year to date basis through the end of June.

As we reported in last week’s Second Quarter Report Card, the HedgeCoVest Composite models performed relatively well with 11 models gaining ground in the second quarter. An equally weighted portfolio across all 15 HedgeCoVest composite models would have gained 0.21% in the second quarter and would be have been up 3.21% on a year to date basis through the end of June.

The earnings season is just getting under way and that could give investors the chance to focus on the domestic market and worry a little less about what is going on in Europe and in Asia. Even if the market continues to experience increased volatility, the hedge fund industry and the HedgeCoVest models have historically been able to outperform during the times of high volatility.

Rick Pendergraft
Research Analyst
HedgeCoVest