Hedge Fund Reader : Hedge Funds returns show an upward swing at the end of first half

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July 10, 2005

Hedge Funds returns show an upward swing at the end of first half

In the month of June alone Hedge funds posted a growth of 0.90% as reported by the S&P Hedge Fund Index. This makes the funds returns finishing 0.13% up in the first half. This positive trend is a consequence of the Fund Managers becoming more risk friendly. They have been observed to be investing confidently in higher yielding risk assets to generate target returns. Therefore there has been a shift in focus from liquidity management to security selection in order to maximize returns. Due to the redemption and closure of several large funds recently, capital has been removed from the strategy. This has allowed for firming of prices though with some liquidity. As the next major redemption window is still away (year end), managers are actively searching for value amongst securities which have historically known to be cheap. Yahoo Finance Reports:

"Managers have become less risk averse due to a combination of more predictable monetary policy and contained inflation," says Charles Davidson, Senior Hedge Fund Specialist at Standard & Poor's.”

Read More: Hedge Fund Returns End First Half of Year in Positive Territory, Says S&P.

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July 10, 2005 in Emerging Markets | Permalink