Hedge funds rebound in August; Short sellers hurt by market surge

Business Wire, Sept 17, 1996

NASHVILLE, Tenn.--(BUSINESS WIRE)--Sept. 17, 1996--Both U.S. and Offshore hedge funds staged a comeback in August, recovering from turbulent market conditions and small losses in July, according to George P. Van, chairman of Van Hedge Fund Advisors (VAN), a leading hedge fund investment advisory firm.

"The world markets recovered nicely in August, enabling hedge funds and other investment sectors to recover most, if not all, of losses incurred in July, which was a bad month for just about everyone," according to Mr. Van.

The average U.S. hedge fund gained 2.5% in August, up from a loss of 2.1% in July, while the average Offshore hedge fund gained 1.6% in August, up from a loss of 2.2% in July. By comparison, the S&P 500 gained 2.1% in August, up from a loss of 4.4% in July, while the average equity mutual fund gained 3.5% in August, up from a loss of 5.1% in July.

"Unfortunately, the market's recovery in August spelled bad news for hedge funds that specialize in short selling," Mr. Van continued. "Following outstanding performance in July, when the average U.S. Short Selling hedge fund gained 12.1% and the average Offshore Short Selling hedge fund gained 14.0%, the average U.S. Short Selling hedge fund lost 5.8% in August and the average Offshore Short Selling hedge fund lost 5.7%. This was not unexpected, as this investment style tends to thrive on market declines and performs worst when markets are on the rise."

Worldwide in August, the best performing hedge fund investment styles were U.S. Value, up 4.1%; U.S. Opportunistic, up 3.3%; Offshore Aggressive Growth, up 3.2%; and U.S. Aggressive Growth, up 3.1%.

Year-to-date through August, the best performing hedge fund investment styles were U.S. Emerging Markets, up 18.6%; U.S. Market Neutral Securities Hedging, up 16.3%; U.S. Special Situations, up 16.0%; and U.S. Distressed Securities, up 15.9%. By comparison, over the same period, the average U.S. hedge fund gained 12.1%, the average Offshore hedge fund gained 9.8%, the S&P 500 gained 7.5%, the average equity mutual fund gained 8.0% and the average bond mutual fund posted no gains.

For August 1996, hedge fund returns by investment style were as follows: -0-

                              U.S.        Offshore
Aggressive Growth             3.1%          3.2%
Distressed Securities         2.0%          0.7%
Emerging Markets              2.1%          2.3%
Fund of Funds                 2.3%          1.2%
Income                        1.3%          1.4%
Macro                         2.8%          1.0%
Market-Neutral Arbitrage      1.3%          N/A
Market Neutral-Securities
 Hedging                      1.3%          N/A
Market Neutral Strategies     N/A           0.9%
Market Timing                 2.1%          1.7%
Opportunistic                 3.3%          1.7%
Special Situations            2.5%          0.8%
Short Selling                -5.8%         -5.7%
Several Strategies            2.4%          N/A
Value                         4.1%          2.3%

Year to date through August 1996, hedge fund returns by investment style were as follows: -0-

                              U.S.        Offshore
Aggressive Growth             8.9%         13.6%
Distressed Securities        15.9%         11.3%
Emerging Markets             18.6%         13.4%
Fund of Funds                 9.9%          8.1%
Income                        7.2%          2.6%
Macro                         0.4%         12.5%
Market-Neutral Arbitrage      9.6%          N/A
Market Neutral-Securities
 Hedging                     16.3%          N/A
Market Neutral Strategies     N/A          10.6%
Market Timing                 5.7%          2.7%
Opportunistic                13.3%         10.5%
Special Situations           16.0%         12.5%
Short Selling                -0.6%         -1.2%
Several Strategies           12.4%          N/A
Value                        13.3%          8.4%

Van Hedge Fund Advisors, Inc. maintains what is believed to be the largest database of hedge funds in the world, with information on approximately 3,000 hedge funds. VAN's performance index is based on over 2,100 hedge funds (approximately 1,200 in the U.S. and 900 Offshore) that manage over $100 billion in assets. VAN works with faculty of the Owen Graduate School of Management of Vanderbilt University to help ensure the statistical validity of its hedge fund research.

A registered investment advisor, Nashville, Tenn.-based Van Hedge Fund Advisors identifies top performing hedge funds for substantial investors both in the U.S. and overseas. -0-

Note to Editors: VAN has available upon request expanded information and tables on all statistics herein.

VAN information on hedge funds is based on information received (and not audited or independently verified) from the hedge funds in VAN's databases and may not be representative of all hedge funds. Different statistics may be based on different numbers of funds. Averages are not dollar-weighted. Past results are not necessarily indicative of future performance.

Database Reference: Investments, Hedge, Funds, Finance, Mutual Funds, Futures, Derivatives, Stocks, Bonds, Currencies, Commodities, U.S. Hedge Funds, Offshore Hedge Funds, Market-Neutral.