Hedge funds fail to make gains as short positions don’t pay off

HEDGE funds have failed to advance ahead of stock market indices, as shorting stock hit performance.

The latest performance index by Hennessee Group, an adviser to hedge fund investors, found hedge funds had advanced just 1.36 per cent in April.

In contrast, the S&P 500 gained 2.85 per cent last month, whilst the Dow Jones Industrial Average was up 3.98 per cent.

Solid corporate profits and continued low interest rates also hit hedge funds holding short positions.

“While managers generated gains in long portfolios as equity markets continued to rally, shorting continues to work against hedge fund managers, detracting from performance,” said Lee Hennessee, managing principal of Hennessee Group.