HFN: Hedge Funds Top The S&P In ‘07

Jan 8 2008 | 12:31pm ET

Emerging markets and energy sector hedge funds topped their peers in 2007, as hedge funds topped the broader markets, according to early estimates from HedgeFund.net.

The research firm’s equal-weighted HFN Hedge Fund Aggregate Average returned 10.86% last year, after a 0.89% rise in December. That’s below its 2006 return of 11.99%, but unlike that year, the industry bested the Standard & Poor’s 500 Index in 2007, with the latter returning 4.9% last year.

Emerging markets was the strongest subindex in 2007, returning 20.83% on the year after a 0.94% December return. Rounding out the medal stand are energy sector funds, which powered their way to a 17.53% return on the back of a 3.81% rise in December—the month’s best—and Asia hedge funds, which added 15.86% on the year after a 1.08% increase last month.

None of the strategies tracked by HFN finished the year in the red, but two were losers in December. Convertible arbitrage funds dropped 2.09% in the year’s final month, while event-driven funds lost 0.24%. Both strategies were among the worst performers of 2007, with the former returning just 2.88% on the year, and the latter 6.69%. Other weaker 2007 strategies were distressed (6.25% in 2007, 0.25% in December) and equity market-neutral (7.19%, 1.34% in December).

Among other strategies, CTA/managed futures funds were up 12.7% in 2007 (2.09% in December), macro funds returned 12.4% (1.66%), long/short equity 11.71% (0.68%) and global funds 10.64% (0.71%).

U.S. funds were up 10.64% (10.57%), and Europe funds 7.34% (0.74%).

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