Two of the major global hedge fund indexes under performed major equity indexes in 2004 as stronger global equity markets underpinned long-o...

Two of the major global hedge fund indexes under performed major equity indexes in 2004 as stronger global equity markets underpinned long-only investment strategies. The Van Global Hedge Fund Index, which follows 350 funds, rose 7.8 percent in 2004, compared with a return of 19.7 percent in 2003. The Hennessee Hedge Fund Index, which follows 730 funds, rose 2.1 percent in December for a gain of 8.3 percent in 2004. The US Standard & Poor’s 500 Index climbed 10.9 percent in 2004, while the MSCI World Equity Index advanced 12.8 percent. The Nasdaq Composite index returned 8.6 percent. “Although hedge funds in 2004 didn't match their performance from the previous year, they performed well given the challenges they faced: a range-bound stock market until the November elections, rising oil prices and interest rates, and dampened volatility during parts of the year,” said George Van, chairman of Van Hedge Fund Advisors. Short-selling hedge funds, which bet on falling share prices, were the worst-performing strategy in 2004. Distressed securities hedge funds, which invest in troubled companies, and value-orientated equity hedge funds were the top performers last year.