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Hedge funds gain in July

THE HEDGE fund industry made further gains in July but was unable to outperform equities, according to two pieces of research out yesterday.<br /><br />The Hennessee Hedge Fund index (HHF) advanced by 3.37 per cent during the month, compared to a 7.41 per cent gain on the Standard &amp; Poor&rsquo;s, an 8.58 per cent rise on the Dow Jones Industrial Average and a 7.82 increase on the NASDAQ Composite Index.<br /><br />&ldquo;Hedge funds underperformed in July, as we would expect, but we were able to capture a good portion of the market rally,&rdquo; said New York-based Hennessee Group&rsquo;s managing principal Lee Hennessee. &ldquo;However, managers remain vigilant, knowing that markets could crack quickly.&rdquo;<br /><br />The Hennessee Long/Short Equity index gained 2.89 per cent, while the firm&rsquo;s Arbitrage/Event driven index added 3.62 per cent.<br /><br />Meanwhile, Chicago-based Hedge Fund Research (HFR) said that investor withdrawals in the second quarter had fallen around 60 per cent from the previous quarter as risk aversion has receded.<br /><br />HFR said that assets invested in the hedge-fund industry increased by $100bn (&pound;61bn) over the period, ending at $1.43 trillion, marking the first increase in assets since the second quarter of 2008.<br /><br />The firm said that the asset growth was fuelled by performance gains during the quarter, as the HFRI Fund Weighted Composite index returned 9.13 per cent, the industry&rsquo;s best quarterly gain since the fourth quarter of 1999.