Hedge Funds Returned 0.5% in February on Stock Market Recovery

March 10 (Bloomberg) -- Hedge funds returned 0.5 percent in February, led by North American managers, as global stock markets rose on signs of recovery in corporate earnings and U.S. interest rates are likely to remain low, Eurekahedge Pte said.

 

The Eurekahedge Hedge Fund Index, tracking more than 2,000 funds, is down 0.3 percent this year through February, after posting its first monthly loss in four in January, the Singapore-based research firm said in a preliminary report on its Web site. Almost 90 new funds started globally in the first quarter of this year, the report said.

Improved global manufacturing data last month and Federal Reserve Chairman Ben S. Bernanke's indication that he will keep U.S.

 

interest rates low "for an extended period," helped boost hedge-fund returns and pushed the the MSCI World Index 1.2 percent higher in February. A measure tracking North American managers, which make up 65 percent of the hedge-fund universe, led the month's gain, rising 1.4 percent, Eurekahedge said.

 

Bernanke said last month the U.S. economy is in a "nascent" recovery that still requires low interest rates to encourage demand by consumers and businesses once federal stimulus expires. Slack labor markets and low inflation will allow the Federal Open Market Committee to keep the benchmark lending rate low, he said. The rate has been in a range of zero to 0.25 percent for more than a year.

Greece Concerns Latin America, Asian and Japanese managers also posted gains of 0.5 percent, 0.2 percent and 0.1 percent respectively, the report showed.

 

The euro's weakness amid speculation of Greece's sovereign debt default sent the Eurekahedge Eastern Europe and Russia Hedge Fund Index down 4.5 percent, while the measure tracking European managers declined 0.7 percent, the firm said.

 

Eight out of nine different strategic indexes rose, with the measure tracking commodity trading advisers known as CTAs gaining 1.3 percent, the best performer. Managers of CTAs benefited from strength in commodity prices as well as the U.S. dollar, the report said. The measure tracking funds that invest in distressed debt was little changed, falling 0.02 percent.

 

Eurekahedge's figures are estimates based on the 39 percent of funds that have so far disclosed performance to the researcher. The firm plans to release full data later this month.

Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether the price of assets will rise or fall.