The Greenwich-Van Global Hedge Fund Index returned -0.20% in July according to hedge fund index provider Greenwich-Van Advisors, LLC.

Year to date the index is up 5.63%.

In comparison, the S&P 500, MSCI World Equity Index, Nikkei 225 and the Lehman Brothers Aggregate Bond Index returned +0.62% (3.34% YTD), +0.53% (+5.50% YTD), -0.31% (-4.06% YTD) and +1.35% (+0.62% YTD), respectively in July.

“Hedge funds experienced another flat month in July despite steep losses in many small cap and technology stocks,” noted Wade McKnight, vp of Greenwich-Van. “The key element to hedge fund performance going forward will likely be U.S. interest rates. Equity markets, for the most part, declined in the first half of July and recovered during the second half of the month. Short selling was the best performing strategy in July with a net return of +4.5%. This was followed by a gain of +1.16% for market timing. Statistical arbitrage and convertible arbitrage posted gains of +0.9% and +0.73%, respectively. The worst performing strategy occurred in the futures category, whereby those managers lost -3.43%. All hedge fund strategies and sub strategies within the Greenwich-Van Index still remain positive year-to-date in spite of the recently challenging market environment.”

The July Index included 823 funds.

The Specialty Strategies Group, comprised of emerging markets, income and multi- strategy hedge fund strategies, returned +0.57% in July (+7.94% YTD). As liquidity dried up in July, the Emerging Market Bond Index spent most of the month grinding quite a bit higher and tighter. As a result, most emerging market managers were back in positive territory, unlike May and June, during which periods they experienced turmoil linked to political noise. Macro managers were down half a percent; however, they are up +4.07% year-to-date.

The Greenwich-Van Global Income, Emerging Markets and Multi-strategy indices returned +0.95%, +0.69% and -0.21%, respectively.

The Market Neutral Group yielded +0.28% in July (+6.43% YTD). The arbitrage strategies have delivered strong returns in 2006 lead by convertible arbitrage gaining +7.88% (YTD). This strategy, only a year ago, seemed, by many, to be eternally flawed, but many traders in the convertible space are now finding exceptional mis-pricing opportunities. Assets have returned and the strategy is performing well. Event-driven managers had a flat month, while their year-to-date return stands at +7.19%. The Greenwich-Van Global Market Neutral Arbitrage, Event Driven and Equity Market Neutral Indices returned +0.62%, +0.10% and -0.45% in July, respectively.

The Long/Short Equity Group returned -0.06% in July (+5.42% YTD). While equity markets staged a significant rally in the last few days of trading, this wasn’t enough to bring the Russell 2000 (-3.33% in July) and the NASDAQ (-3.71% in July) back into positive territory. Long/short equity managers were fortunately able to avoid most of these losses. Greenwich-Van’s Global Short Selling, Value, Aggressive Growth and Opportunistic Indices returned +4.50%, -0.16%, -0.28% and -0.49%, respectively.

The Directional Trading Group, comprised of futures, market timing and macro- oriented hedge fund strategies, returned -2.22% in July (+2.07% YTD). Brutally choppy price movements, linked to continued fears of higher interest rates and inflation, negatively impacted systematic futures across the financial markets. Market timing managers delivered +1.16% to their investors; however, this wasn’t enough to offset losses in the macro and futures space. The Greenwich-Van Global Macro and Futures indices returned -0.56% and -3.43% in July.