Hedge Funds Cap Bad Year With December Losses
Wednesday, January 18, 2012
Hedge funds lost 0.38% in December, according to the Barclay Hedge Fund Index
compiled by BarclayHedge. The Index was down 5.37% at the end of 2011.
“Equity markets started the month with a sell-off, and then went on to
rally going into Christmas,” says Sol Waksman, founder and president of
BarclayHedge. “Unfortunately, markets that see-saw can be quite difficult
for managers to navigate successfully.”
“Dramatic volatility in global equity markets created a significant challenge
for fund managers throughout 2011, evidenced by the fact that 60% of funds reported
a loss for the year,” says Waksman.
“This led to an underperformance by hedge funds of 7.39% when compared
to the S&P 500, the worst since the 10.69% gap in performance back in 2003.”
After overall gains in the first four months of the year, it was mostly downhill
for hedge funds for the remainder of 2011.
The Barclay Emerging Markets Index lost 13.02% in 2011, Equity Long Bias was
down 9.38%, Pacific Rim Equities gave up 7.95%, European Equities were down
6.44%, and the Distressed Securities Index lost 6.32%.
“Although Emerging Markets was the poorest performer of the sectors that
we track, investors continue to be attracted to the strategy, as evidenced by
inflows of USD7.6bn in the past 12 months,” says Waksman.
Equity Short Bias was the strongest performing hedge fund strategy in 2011,
with an overall return of 7.70%. Fixed Income Arbitrage gained 4.54% for the
year, and Merger Arbitrage was up 3.99%.
“Fixed Income funds saw investor inflows of USD18bn in the past 12 months
even as prognosticators fretted that the three-year rally was starting to appear
a bit long in the tooth,” says Waksman.
The Barclay Fund of Funds Index was down 0.49% in December, and lost 6.14%
in 2011.
BarclayHedge was founded in 1985 and actively tracks more than 6,100 hedge
funds, funds of hedge funds, and managed futures programs.
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