Hedge Funds Post Best Start Since 2000

Mar 8 2012 | 9:21am ET

Hedge funds added 2.14% in February, bringing their YTD gains to almost 5%, their strongest start to a calendar year since 2000, according to Hedge Fund Research.

The healthy 2012 debut was thanks, in large part, to strategies that underperformed in 2011, according to HFR. Equity hedge funds added 2.99% in February (6.9% YTD) while event driven funds added 1.89% (4.56% YTD) with significant positive contributions from activist and special situation funds.

Fixed income-based relative value arbitrage funds gained 1.7% in February (3.6% YTD) thanks to spread tightening and strong liquidity.

Macro funds were up 1.2% in February (2.4% YTD) despite the volatile commodity and trend-following environment. Systematic, trend-following macro funds gained 1.1% in February and have gained 1.5% so far in 2012.

Emerging markets funds posted strong gains of 4.3% in February, for a YTD gain of 9.3%. HFR says performance was strong across all emerging markets but Russian and Eastern Europe strategies did particularly well, up 12.7% so far in 2012.

"Hedge fund performance through early 2012 has benefitted from improvement or total reversal of the trends, sentiment and volatility which contributed to the challenging environment in 2011," said Kenneth J. Heinz, president of HFR. "While many of the macroeconomic risks remain salient in the current environment, fundamental and convergence-oriented themes and positions have gained traction on improvements and optimism across U.S. and European economic outlooks. While equity market volatility may rise from early 2012 subdued levels, hedge funds are well positioned in the current environment to opportunistically adjust exposures and generate gains across multiple asset classes globally in 2012."

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