Credit Suisse recently published their 2010 Hedge Fund Industry Review. In a previous post, we had mentioned that the Dow Jones Credit Suisse Hedge Fund Index had returned 10.95%. The good performance of hedge funds has investors returning. Hedge funds have returned 31.55% since the bottom of the markets two years ago.
Of the ten strategies tracked, eight had positive returns with Global Macro, Event Driven and Fixed Income Arbitrage leading the way. Global Macro funds used two themes for investing ideas: intervention by central banks and commodities. Event Driven funds using the Distressed Debt strategy found better investments due to the European debt crisis. Fixed Income Arbitrage managers took advantage of the intervention by central banks to find investing opportunities.
The most successful strategies: Global Macro and Event Driven received the most interest from investors. Global Macro had $16.8 billion in asset inflows and Event Driven had $13.8 billion. Multi-Strategy had $16.9 billion in outflows.
Small funds with assets under management of $100 million have outperformed large funds (with $500+ million AUM) by 3.95% annually. They may be nimbler than large funds - being able to quickly get in or out of positions due to the smaller size or less bureaucracy - or they may be riskier. During major market moves, the outperformance is more pronounced. When markets are quiet, large funds perform on a par with smaller funds.
The research report may be accessed here.
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