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January 11, 2008
Hedge funds up 10.36% in 2007
The average hedge fund managed double-digit returns—just—last year, according to figures from Hedge Fund Research.
The firm’s HFRI Fund Weighted Composite Index returned 10.36% for 2007 after a 0.68% rise in December. Funds of funds trailed, but not by much, adding 9.94% last year following a 0.1% return last month.
As far as individual strategies go, there are emerging market funds, and then there’s everybody else. E.M. blew all other comers out of the water, returning 24.91% on the year (1.75% in December). Funds focused on Asia, in particular, had a stellar 2007, soaring 35.88%. The strategy’s 2.82% December return was also tops among those tracked by HFR.
Energy hedge funds also enjoyed a successful 2007, returning 16.47% (1.95% in December). Technology funds also posted strong returns, adding 15.68% on year, though the strategy fell 0.46% last month.
Speaking of losing, just three of the myriad strategies and sub-strategies tracked by the HFRI indices finished last year in negative territory. Hedge funds focusing on the financial sector suffered the most, as financial firms were battered by the credit crisis and roiling stock markets. The strategy lost 5.88% in 2007, dropping 1.62% in December alone. Real estate hedge funds were pushed into the red by a 2.41% decline last month, leaving the strategy down 1.33% on the year. And high-yield funds finished marginally down, losing 0.14% in 2007 (down 0.05% in December).
Among other major hedge fund strategies, macro funds posted a 12.2% return in 2007 (1.33% in December), while equity hedge funds returned 10.71% (0.68% last month). Relative value funds added 9.35% (0.99% last month), event-driven 7.38% (0.13%), merger arbitrage 6.73% (down 0.67% last month) and distressed securities 6.29% (0.55%).
Equity-market neutral funds were up 5.78% last year (0.78% last month), convertible arbitrage 4.9% (down 0.83% last month) and fixed-income 2.68% (0.23%).
Investable hedge funds did proportionally worse, according the HFR’s HFRX indices. Overall, investable funds returned 4.23% in 2007, declining 0.14% in December. While only one of the HFRX subindices found itself in the red last year—convertible arbitrage, which lost 0.95% for the year after a 2.17% drop in December—just one bettered the Standard & Poor’s 500 Index, which returned 4.9% in 2007. That was relative value arbitrage, which topped all other investable strategies with a 5.8% return, though like most of the HFRX strategy indices, it found itself in the red last month, dropping 0.42% in December.
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Posted by su at January 11, 2008 10:19 AM