Hedge Funds Add 6% In '12

Jan 10 2013 | 2:00pm ET

The average hedge fund returned just over 6% last after a strong December put a bit of a shine on an otherwise underwhelming year.

The HFRI Fund Weighted Composite Index was up 6.16% in 2012. The Hedge Fund Research benchmark rose 1.26% last month.

Most strategies tracked by the HFRI suite were up both for December and the year. Asset-backed strategies did best in 2012, rising 16.46% (0.63% in Dec.). Asia ex-Japan funds (11.47% in 2012, 2.83% in Dec.), distressed and restructuring funds (10.34%, 2.34% in Dec.), emerging markets funds (10.3%, 3.3% in Dec.) and relative-value funds (10.04%, 0.66% in Dec.) also posted double-digit returns last year.

Event-driven funds rose 8.54% on the year (1.63% in Dec.), equity hedge funds 7.39% (1.56% in Dec.), equity-market neutral funds 3.27% (0.5% in Dec.) and merger arbitrage funds 2.98% (1.34% in Dec.).

Last year's losers were led by short-bias funds, which could not withstand the 16% jump by the Standard & Poor's 500 Index. They lost an average of 17.46%, falling a further 3.02% in December. Energy and basic materials funds fell 5.79% (down 0.07% in Dec.), systematic diversified funds 2.5% (up 1% in Dec.) and macro fund 0.18% (up 1.04% in Dec.).

The HFRI Fund of Funds Composite Index was up 5.25% on the year (1.6% in Dec.). Only one fund of funds strategy lost ground in 2012: market defensive, which was down 1.2% (up 0.94% in Dec.).

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Editor's Note