Credit Suisse Index Co. today revealed that, not surprisingly, the long and short-term outlook for hedge funds makes them a favorable investment vehicle in both bull and bear markets.
In a report dubbed The Hedge Fund Industry Rocks Both Bear and Bull Markets, Credit Suisse found that last year hedge funds used a diverse range of strategies and unique trading styles to profit from market trends resulting in nine out of the 10 sectors of the Credit Suisse/Tremont Hedge Fund Index producing positive results. And despite market downtrends in May and June combined with the collapse of Amaranth, hedge funds continued to attract a healthy level of inflows.
Also, hedge funds’ aversion to correlation with global equity markets has resulted in the Credit Suisse/Tremont Hedge Fund Index suffering almost zero drawdown in the past 10 years. In contrast, during the bear markets of 2001 through 2003, most major equity markets indices on average lost over 40%.
“Hedge funds, as represented by the Credit Suisse/Tremont Hedge Fund Index, maintain exposure to a range of asset classes making them a more balanced investment vehicle compared to traditional indices,” stated Oliver Schupp, president of Credit Suisse.