Hennessee Group LLC, an adviser to hedge fund investors, announced yesterday that the Hennessee Hedge Fund Index advanced +1.92% in April (+5.44% YTD).
“While the strong equity markets have been a wind at the back of hedge fund performance, most funds continue to be relatively conservatively positioned,” said E. Lee Hennessee, Managing Principal of Hennessee Group LLC. “Many are concerned about the continued deterioration in housing, increasing inflation, extraordinarily tight credit spreads, and a weak dollar.”
The Hennessee Long/Short Equity Index advanced +1.85% in April (+5.15% YTD). First quarter earnings reports were generally better than expected, acting as a catalyst for the Dow Jones Industrial Average to eclipse 13,000 and again set new all-time highs.
“While first quarter GDP growth of +1.3% failed to meet expectations, the majority of the decline in growth was due to housing,” said Charles Gradante, Managing Principal of Hennessee Group LLC. “Given the decline in housing, most managers have been surprised about the strength of consumer spending, which represents two-thirds of the overall U.S. economy.”
“Most macro managers are concerned about the dollar, as interest rates in Europe continue to increase and the current account deficit is now 7% of GDP, which is an all-time high for the U.S.,” stated Mr. Gradante. “Fundamentals are strong in the economy and the market, however, a free fall in the dollar is the Achilles’ heel of this market.”
The Hennessee Hedge Fund Indices are calculated froma group of over 1,000 hedge funds. The funds in the Hennessee Hedge Fund Index are derived from the Hennessee Group’s database of over 3,500 hedge funds.