Hedge Funds Reverse Downward Spiral In January
Hedge funds outperformed the broader markets last month posting gains of 1.1%.
February 9, 2009
Hedge funds advanced in January, outperforming the broader financial markets and ending a cycle of six consecutive monthly declines, according to industry advisory firm Hennessee Group.
The Hennessee Hedge Fund index, which tracks performance of more than 1,000 hedge funds, advanced 1.1% last month, led by hedge funds applying arbitrage-related strategies. In January, the S&P 500 and the Dow Jones Industrial Average each declined by about 9%.
Despite the declines in the broader market indices, Hennessee Group says there are signs of recovery in the equity capital markets. "We are encouraged by the $6.5 billion that poured into mutual funds during the last week of January," said Lee Hennessee, managing principal of Hennessee Group, in a statement. "We continue to monitor fund flows and believe that if this trend continues, it could be basing and a bullish sign for equity markets."
The Hennessee Arbitrage/Event Driven Index increased 2.36% last month, outpaced only by the Hennessee Convertible Arbitrage Index, which advanced 5.79%. The merger arbitrage index gained 0.61% in January. "Many merger arbitrage-dedicated managers state that deal spreads are very wide and offer an attractive risk premium. 2009 deal flow is off to a good start as we have already seen several transactions, including the Wyeth-Pfizer, Terra Industries-CF Industries and several other deals," according to the statement.
Hennessee Group is bullish on gold. "Hennessee Group began recommending higher gold allocations for their clients at $350 and still thinks gold should be accumulated," according to Charles Gradante, co-founder of Hennessee Group.
For more information on related topics, visit the following:
