Hedge funds posted broad but uninspiring gains in November as they crawl to the finish in their worst year against the Standard & Poor's 500 Index in more than a decade.
Hedge funds rose 1.03% last month, according to Hedge Fund Research's HFRI Fund Weighted Composite Index. That benchmark is now up 8.31% on the year, leaving hope that a strong Santa Claus rally in December could push the average industry player into double-digits. That would be something of a hollow victory, however, given that the S&P500 is already up 26% on the year.
Technology and healthcare funds were the best performers in November, up an average of 2.25%. They're also the best year-to-date, up 19.66% through 2013's first 11 months.
Yield alternative funds added 1.36% last month (16.66% YTD), systematic diversified funds 1.31% (down 1.4% YTD), asset-backed funds 1.27% (9.22% YTD), equity hedge funds 1.22% (12.94% YTD), macro funds 1.05% (down 0.18% YTD), quantitative directional funds 0.99% (9.77% YTD), distressed and restructuring funds 0.98% (12.25% YTD), equity market neutral funds 0.87% (6.33% YTD), event-driven funds 0.85% (10.99% YTD), multi-strategy funds 0.68% (7.23% YTD), relative value funds 0.4% (6.12% YTD) and merger arbitrage funds 0.23% (4.16% YTD).
"Hedge funds have extended gains in recent months, with Equity Hedge and Event Driven funds leading industry returns as investor risk tolerance continues to normalize, supported by U.S.-centric equity market gains, but despite lack of clarity on reduction of U.S. stimulus measures contributing to mixed performance across global and emerging equity markets," HFR President Kenneth Heinz said. "Through this improving but transitional environment, Macro and trend-following CTA funds have only recently begun to experience improved performance, following calendar year declines in both 2011 and 2012."
Short-bias funds continued to take a beating amidst the market rally, falling 1.34% in November (down 15.87% YTD). Corporate debt funds shed an average of 0.52% (up 3.96% YTD) and convertible arbitrage funds dropped 0.15% (up 7.3% YTD). Emerging markets funds also lost ground, falling 0.17% (up 4.72%); hardest hit were Latin America funds (down 2.41% in November, down 6.11% YTD) and Russia and Eastern Europe funds (down 1.76%, up 2.19% YTD). Asia ex-Japan funds actually posted a respectable 1.13% gain on the month (10.27% YTD).
The HFRI Fund of Funds Composite Index added 1.01% in November, and is up 7.47% on the year.