Hedge Fund Returns Negative So Far in 2008

Tom Burroughes

14 March 2008

Hedge funds made a net return after fees and other expenses of 1.31 per cent in February, but sharp losses in January meant the $1.9 trillion sector is still in the red so far this year, according to RBC Capital Markets’ Hedge 250 Index. Net returns since 2 January 2008 were -0.73 per cent, RBC said in its preliminary data for February, due to be updated later in March. In January, the index was negative, at -2.01 per cent. The multi-strategy component of the RBC index made the heaviest negative return, at -1.38 per cent. By contrast, the strongest returns came from managed futures funds, at 4.91 per cent. The latter funds use futures to make bets on commodity, equity and credit markets, typically using mathematically-driven models that give out buy or sell signals, based on historical price data. The RBC Hedge 250 Index is an investable benchmark and is made up of more than 250 funds. The universe on which the index is based currently consists of 5,877 hedge funds with aggregate assets under management of $1.635 trillion. Since its inception on 1 July 2005 through the end of January 2008, the RBC Hedge 250 Index has had an annualised net return of 8.78 per cent. RBC Capital Markets is a division of Royal Bank of Canada.