BarclayHedge: Hedge Funds Up Over 8% After Strong Q4

Jan 15 2013 | 11:51am ET

Hedge funds rose 8.27% last year, with all strategies save those shorting the rallying stock market posting gains, according to BarclayHedge.

The Barclay Hedge Fund Index saw its 10th month of positive returns on the year in December, rising 1.63%. But despite such superficially gaudy numbers, the benchmark managed only roughly half the return of the Standard & Poor's 500 Index last year.

"Buoyant equity markets at the beginning of the month collided with fiscal cliff fears at mid-month, only to explode higher on Dec. 31," BarclayHedge founder Sol Waksman said. "Hedge fund returns outpaced the S&P 500 for a third consecutive month in December, but still lagged by 7.76% at year-end."

Healthcare and biotechnology funds led the way in 2012 with a 13.79% jump, followed by distressed securities at 12.05%, European equities at 10.17%, emerging markets at 9.94%, equity long-bias at 9.34% and fixed-income arbitrage at 9.33%. Only short-bias funds lost ground in the Barclay index, but they lost a lot of ground: The strategy fell 24.18%, its worst-ever return since BarclayHedge began tracking performance in 1997.

Three strategies, including equity short-bias, fell in December. The aforementioned lost 5.97%, technology 0.33% and equity market neutral 0.06%.

Leading the way in December were Pacific Rim equities, up 3.17%; emerging markets, up 2.87%; European equities, up 2.24%; equity long-bias, up 2.04%; and distressed securities, up 1.95%.

Funds of hedge funds rose 4.6% in 2012 and 1.05% last month.

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