WEST PALM BEACH, FL (HEDGECO.NET) – As the global equity market recovers from tough economic conditions of the past several years, mutual fund stock portfolios continues to post improving returns aswell. For instance, in January hedge funds gained 2.14% according to data from New York based fund tracker Hennessee Group, while the average mutual fund posted a gain of 2.27%. Also in February,stock mutual funds beat the average gain posted by hedge funds, with a return of 1.30% compared to a gain of 0.99% by the average hedge fund.
Hedge funds use a combination of absolute return strategies in trading, and have over performed equity markets for the past 3 years. Mutual funds for the most part rely on traditional investment philosophy of �buy and hold� strategies for trading. Market analysts contends that mutual funds do well in rising markets, and it may be a tough challenge for hedge funds to beat them under rising markets.
Some hedge fund industry analysts think many hedge fund managers are becoming more cautious in their analysis and trades; some are concerned that last year’s stock market recovery could lose steam. Charles Gradante, managing principal at Hennessee Group said, “Despite positive performance in February, hedge fund managers believe the rally may be under pressure and are reluctant to increase net market investments.�
According to the data from Hennessee Group, the percentage of hedge fund managers with bullish bias for stocks has declined to about 40% from 52% and 68% recorded in the months of February and January respectively.
However more affluent investors and other institutional investors continue to pour more assets into hedge fund strategies. Over the past year, assets managed by the global hedge fund industry increased to about US$800 billion, such trends are projected to continue for the immediate future, as more hedge funds hit the market.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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