2008 was the worst year for hedge fund performance since data onalternative investment pools began to be tracked, with average returns of -17.08% across asset classes for the past year, a new report has revealed.
In the report, Hedge Fund Performance in 2008, the France-based Edhec Business School highlighted how widespread poor performance was across asset classes last year, with only two strategies posting positive returns.
Particularly hard hit were emerging markets and convertible arbitrage strategies, which saw their returns performance sink to -30.3% and -26.48% respectively. Fund of funds returns, which the report notes is "sometimes taken to give an aggregate view of the industry's performance" were down at -17.08%, the worst returns since Edhec first began to collate data in 1997. In contrast, fund of funds returns in 2006 and 2007 were 11.25% and 10.07% respectively.
Amid the carnage, however, short-sellers experienced their best year since 2002 - despite the Securities and Exchange Commission banning the practice in September and October 2008 - with returns of 24.72%.
Though losses were concentrated in September and October - a period of heightened volatility that followed the collapse of Lehman Brothers - six strategies actually posted negative returns for as many as nine months in 2008, including convertible arbitrage, distressed securities, emerging markets, event driven, fixed income arbitrage, and funds of funds strategies.
However, conditions for hedge funds appeared to stabilise in January, according to data from Chicago-based Hedge Fund Research, with its fund of funds composite index positing positive returns of 0.98%, a marked improvement on the -20.97% contraction the index recorded for 2008 as a whole.
More on Structured Products
ESAs propose visual representations of risk in key information document
Regulatory panel suggests backtesting internally is best practice
Growing appetite for ETFs buoys market confidence
The region's exchange-traded funds take in $56.2bn by end of October
Sign up for Risk.net email alerts
Sponsored webinar: IBM Risk Analytics
Nominated for two technology awards
Nominated for post trade technology award
Sponsored webinar: Collateral and counterparty tracking
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.