Hennessee Hedge Fund Advisory Group, a hedge fund investment consulting firm, announced earlier this month that hedge funds posted a 1.5% return in June, placing its year-to-date return at 8.98%.
The data also indicated that broader market indices were also recovering in June, with the S&P 500 index gaining 1.3% in the month and 11.8% year-to-date. The Dow Jones Industrial Average increased 1.5% in June and 7.7% for the year, while the Nasdaq was up 1.7% in the month and 21.5% year-to-date.
"As the equity markets rallied in April, May and June on expectations of an economic turnaround, hedge funds demonstrated an ability to recognize market direction and increased their net exposure in a timely manner, thereby capturing most of the upside move in the broad market," said Charles Gradante, managing principal at Hennessee, in a prepared statement.
The top-performing index for June was the Hennessee Pacific Rim Index, comprised of Korean, Chinese, and Taiwanese equity markets. It produced a 3.4% return in the most recent month, bringing it up 5.3% for 2003. It is assumed that there has been a significant relief rally from the SARS outbreaks, which rattled investor confidence around the world, particularly in Asia.
China was the driving force behind the rally as its currency, effectively pegged to the U.S. dollar, made Chinese products more appealing. The second best performer for the month was the Hennessee Distressed Index, sporting a 2.8% pop. The surging equity market coupled with strong economic data bolstered the asset class as a whole, with the average high-yield bond now trading at $0.99 on the dollar, Hennessee said.
Hennessee is a registered investment adviser that provides consulting services to hedge fund investors regarding asset allocation, manager selection, ongoing monitoring of hedge fund managers and rebalancing.