Morningstar: Emerging Markets Top Other Hedge Funds, Trail Index

Jan 18 2008 | 8:34am ET

Emerging markets hedge funds drastically outpaced their fellow hedge fund strategies last year, but that may be less impressive than it sounds.

The strategy of the year returned 31.97% in 2007, Morningstar reports, after a 4.07% surge in the fourth quarter. That’s better than twice the return of the average hedge fund, which added 14.13% on the year (1.98% in Q4), but quite a bit behind the MSCI Emerging Markets Index, which soared 36.48% last year.

Compared to the broader markets, however, hedge funds enjoyed a strong year. The Standard & Poor’s 500 returned just 5.49% last year.

“Hedge funds overcame a tumultuous fourth quarter, and managed to gain 14.13% for the year,” Nadia Van Dalen, hedge fund analyst at Morningstar, said. “The credit crunch intensified in August and November, preventing hedge funds from significantly building on their previous gains.”

Among individual strategies, global equity came in a distant second to emerging markets, returning 15.95% on the year. Only three other strategies, global non-trend, global trend (systematic futures and currencies traders) and global debt, topped Morningstar’s “grand average,” adding 14.86%, 14.69% and 14.56%, respectively, on the year.

During the fourth quarter, global trend and short equity funds were the strongest performers, at 6.52% and 6.17% (7.8% in 2007), respectively.

Investors in distressed securities were not so lucky as the globally inclined. Distressed hedge funds returned just 5.09%. Developed Asia equity funds also lagged their hedge fund counterparts, returning 6.03% on the year.

Funds of funds were up 13.25%, after a 2.58% fourth-quarter return.


In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.