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Alternative Market Briefing

Equity hedge funds out perform benchmarks by 10% validating the value of shorting

Thursday, July 09, 2009

From the Opalesque Team:

The Hennessee Hedge Fund Index, released on Wednesday, showed equity hedge funds outperformed their benchmarks by 10% during the first half of 2009. “The outperformance is largely due to the ability of hedge funds to profit from their short portfolios,” said Hennessee Group Managing Principal Lee Hennessee in a statement.

Equity hedge funds showed the strongest quarterly gains since June 1998, even with a flat market in June. This performance backed the statement given by Carrie McCabe, , CEO and founder of FoHFs firm Lasair Capital during the Opalesque New York Roundtable: “Let’s not give equities the short shrift,” she said, pointing out that equities are the largest asset allocation for institutional investors. This weighting could significantly boost the assets of long/short equity hedge funds as Veteran investors allocate to hedge funds from outside their “alternatives” bucket.

Hedge funds’ pessimistic outlook on the markets drove most of the 2009 outperformance.

“We have had almost ten years of a bull market in almost every asset class you can think of until 2008 and it will take more than 18 months to correct,” said Ed Robertiello, Managing Director at Credit Suisse Asset Management during the Roundtable discussion. Robertiello, who......................

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