This year’s powerful market rally hasn’t left many hedge funds out in the cold. Through August, 79% of funds reporting to the Absolute Return database have made gains this year. More significantly, hedge funds are back on a significant winning streak: In each of the past six months (March through August), the majority of Americas-based hedge funds--a minimum of 62% (in June) and as many as 85% (in May)--have profited.
If most hedge funds show gains in September, the current streak would be the longest since July 2007, which ended a 13-month period during which the majority of hedge funds gained in every month. Funds also produced a six-month run ending April 2006.
Not surprisingly, hedge funds reported their worst stretch of performance over the five-month period between July and November 2008. At its worst point, in September 2008, only 29% of funds made gains--the lowest month in at least 10 years.
Prior to last year, there had never been more than two months in which most funds lost money, at least since 1998, when the Absolute Return database began compiling performance numbers. The best month on record is April 1999, when 92% of all funds produced positive performance.
Hedge funds had their longest positive run in the 19 months from September 1998 through March 2000. The second longest stretch lasted 17 months, from November 2002 through March 2004. There have been an average of 9.7 positive months per year from 1999 through 2008. Both 1999 and 2003 had unbroken streaks. The average monthly number of positive funds is 66% since 1999. For 2009, the average through August is 69%.
--Josh Friedlander
