Hedge funds have rediscovered the art of beating conventional investments, rising on average by 0.64 per cent in June from the previous month and rising by 11.74 per cent since the start of the year, according to US-based firm Hennessee.

The Hennessee Hedge Fund index’s performance was superior to the 0.02 per cent advance in the S&P 500 index of US equities in June, and also outperformed the Dow Jones Industrial Average index’s drop of 0.63 per cent (down by 3.75 per cent since January).

Bonds also rose, as the Barclays Aggregate Bond Index advanced by +0.57 per cent in June.

“Hedge funds have outperformed equity benchmarks by a 10 per cent margin in the first half of 2009,” said Lee Hennessee, managing principal of Hennessee Group.  “The outperformance is largely due to the ability of hedge funds to profit from their short portfolios, as we saw in January and February,” he said.

“While hedge funds are routinely publicised as high risk vehicles, the reality of the situation is that the average hedge fund has demonstrated significantly less volatility than traditional asset classes for the 22 years we have been advising investors,” he added.