There were a lot of superlatives to throw around for hedge funds in December, according to Eurekahedge. December was both the sixth straight month of consecutive positive returns for hedge funds and the best last month of the year for North American hedge funds in a decade. Assets under management topped US$1.65 billion for the first time in more than two years. And Japanese hedge funds enjoyed their best year in five.
But one superlative went missing: Hedge funds failed, by a sizable margin, to match the returns of the broader markets.
The Eurekahedge Hedge Fund Index returned 10.86% last year after rising an estimated 2.98% last month. The Standard & Poor's 500 Index, by contrast, added more than 15% last year.
Distressed debt funds led the way—they, at least, topped the S&P500—returning 21.31% on the year after adding 2.57% in December. Event-driven funds returned 16.1% for the year (3.71% in Dec.).
Commodity trading advisers and managed futures funds returned 11.86% on the year (4.71% in Dec.), relative value funds 11.8% (2.13% in Dec.), and arbitrage funds 10.16% (2.1% in Dec.). Long/short equities funds added 9.93% (2.87% in Dec.), fixed-income funds 9.65% (0.51% in Dec.), multi-strategy funds 9.42% (1.88% in Dec.) and macro funds 7.75% (1.8% in Dec.)
Regionally, the industry was led by Eastern Europe and Russia funds, which returned 17.38% on the year (5.73% in Dec.). North American funds followed at 13.63% (3.48% in Dec.), followed in turn by Asia ex-Japan funds (10.42%, 1.33% in Dec.) and emerging markets funds (10.37%, 1.58% in Dec.).