WEST PALM BEACH, FL (HEDGECO.NET) – Short-bias hedge funds have gained through September 30, according to latest data from hedge fund consultant Hennessee Group. According to its report, “short-bias”hedge funds were up 16.2%, vs. a 0.2% gain for the Standard & Poor’s 500 and losses for the Dow Jones industrials and NASDAQ.� Such performance comes in a year marked by poor returns from hedgefunds.
Short selling strategy is an integral part of the hedge fund method of doing business. It involves selling stocks in anticipation of imminent declines in equities. Such strategy benefits from declining prices, but may also result in losses if stocks advance in prices.
The Chairman of hedge fund firm Clarion, Mort Cohen, however warns that implementing s short only strategy carries its own risk. The reason is, according to him, it is not very likely that one style of investment will outperform other styles for extended periods of time.
Overall hedge funds have lost ground in 2004; many market analysts attribute such problem to capacity constraints, including declining levels of volatility in the global stock exchanges. According to the Hennessee hedge fund index, which tracks 23 investment styles, hedge funds gained 2.6% through Sept. 30.
Such performance deviates from the level of returns posted by hedge funds in previous years. However hedge fund returns this year so far are still 2.4 percentage points better than the returns posted by the S&P 500, according to Hennessee data.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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