Credit Suisse/Tremont Hedge Fund index posts 0.3% gain for December to end 2008 down 18.8%

By Angela McDaniels

Tacoma, Wash., Jan. 12 - Credit Suisse said early estimates indicate that the Credit Suisse/Tremont Hedge Fund index will record a gain of 0.3% for December and a loss of 18.8% for 2008.

The figure is based on 74% of assets reporting, according to a company news release.

Despite another rate cut by the U.S. Federal Reserve and news of President-elect Barack Obama's economic recovery plan, investment activity in most hedge fund strategies was relatively quiet throughout December as many managers maintained minimal risk exposures, Credit Suisse said.

Ongoing deleveraging in 2008 by funds and investors resulted in an uncommitted pool of $9 trillion in cash, as measured by the St. Louis Federal Reserve, that is waiting on the sidelines, the release stated.

Credit Suisse said persisting trends in bond and currency markets have resulted in gains for trend-following managers in the Managed Futures/CTAs and Global Macro strategies. Namely, yields fell following the Fed's rate cut announcement, with U.S. 10-year notes touching 2.04% on Dec. 18. The company noted that this is the lowest level since 1953 when records began.

Currency markets also experienced a shift as the dollar ended its 12-week rally with a 10% correction, Credit Suisse said, sliding to a low of 1.45 dollars per euro on Dec. 18.

Strategy estimates are included in the table below. Final December results will be published Jan. 15.

Credit Suisse Tremont Index LLC is a New York-based joint venture company of Credit Suisse Index Co., Inc., a subsidiary of Credit Suisse Co., Inc., and Tremont Group Holdings, Inc.

Strategy estimates

Index/sector December 2008

Credit Suisse/Tremont Hedge Fund index 0.30% Negative 18.80%

Convertible Arbitrage Negative 1.27% Negative 31.79%

Dedicated Short Bias Negative 2.55% 13.87%

Emerging Markets 0.25% Negative 30.38%

Equity Market Neutral 1.89% Negative 39.44%

Event Driven Negative 0.26% Negative 16.91%

Distressed Negative 1.37% Negative 19.52%

Event Driven Multi-Strategy 0.28% Negative 15.60%

Risk Arbitrage 1.49% Negative 3.37%

Fixed-Income Arbitrage 0.72% Negative 27.72%

Global Macro 1.04% Negative 4.69%

Long/Short Equity 0.85% Negative 19.92%

Managed Futures 2.28% 18.23%

Multi-Strategy Negative 1.66% Negative 23.74%

MSCI World 3.06% Negative 42.08%

Barclays Capital Aggregate Bond index 6.21% 4.79%

Dow Jones AIG Commodities index Negative 4.48% Negative 35.65%

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