Hedge Fund Fundamentals
Hedge Funds Getting Back to the Basics in 2011
According to Chicago-based Hedge Fund Research, the average relative value-focused, or arbitrage, hedge fund manager returned 11.73 per cent last year, with only one down month. The average equity hedge fund manager returned 10.58 per cent but lost money in four months.
The figures are more telling if the fourth quarter equity rally sparked by the Federal Reserve’s second bout of “quantitative easing” – a rising tide that lifted all boats – is excluded. In the first nine months of 2010, the average equity hedge fund returned 3.56 per cent compared with 8.17 per cent for the average relative value fund.
But this year seems to continue a trend started in the final quarter. Equity long/short managers have been among the biggest gainers in January. By the middle of last month, several big-name funds were outperforming significantly, according to investors. Source