Hedge Funds Finish 2010 On High Note
Tuesday, January 11, 2011
Hedge fund performance lagged the equity markets last year despite most strategies
earning substantial profits in December, according to year-end data published
by HedgeFund Intelligence.
The HedgeFund Intelligence Global Composite Index, which tracks nearly 4,000
single manager hedge funds, produced a median gain of 8.08% in 2010 against
an 11.76% rise in the MSCI World Index (net).
Funds in the Americas rose 9.44% in 2010, against a 12.78% gain for the S&P
500 Index. European funds gained 6.68% against a 3.88% gain for the MSCI Europe
Index (net). Asian funds gained 7.64% against a rise of 15.92% for the MSCI
Pacific Free Index (net).
Event-driven hedge funds were the best performers globally, gaining 10.38%
in 2010. Macro funds fell into last place globally, rising only 5.16% for the
year.
However, hedge funds continue to outperform equity indices over a longer time
span, according to the data. The global composite was up 102.59% over the past
decade, while the MSCI World Index (net) was up 25.62% and the S&P 500 Index
down 4.74% over the same period.
Other data also shows that hedge funds enjoyed a strong end to 2010. Figures
compiled by Bloomberg reveal that hedge funds returned 1.7% in December, the
sector rebounding from a loss in November to produce the strongest finish to
a year for two years. The Bloomberg aggregate hedge-fund index rose to 120.34,
the highest since August 2008. This index peaked at 130.38 in July 2007.
Other measures of hedge fund performance suggest that
hedge funds produced even stronger returns in December. Data from Hedge Fund Research
shows that hedge funds averaged a return of 3.2% in December to bring the industry's
2010 performance to 10.4%. Meanwhile, the Hennessee Hedge Fund Index advanced
3% in December, to end the year up by 10.2%.
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