Hedge funds outperformed underlying equity markets last year
Returns from absolute return and hedge funds were not immune to the global financial crisis last year, averaging minus 17.7 per cent for the year, but they still outperformed the underlying equity markets.
An Australian Fund Monitors (AFM) review of the two sectors in 2008 compared their favourable performance with a minus 41 per cent return of the ASX 200 index and a minus 38 per cent from the S&P 500.
“What seemed to be missing from the hype and endless criticism of hedge funds during the year was their undeniable performance compared with the ASX 200 and other benchmarks,” said AFM chief executive Chris Gosselin.
He said the major issue seemed to be that hedge funds are perceived to be, or are frequently marketed as investment vehicles which could produce ‘uncorrelated returns’ or ‘positive returns’ in all market conditions.
“Some funds clearly did not achieve this goal but the reality is that 88 per cent of funds in the review outperformed the ASX 200, and 25 per cent of them achieved a positive return in the 12 months to December 2008,” he said.
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