Hedge funds are outperforming stocks and bonds on both a short-term and long-term basis, according to new research from data provider Preqin.
In partnership with the Alternative Investment Management Association (AIMA), the organisation found that the value of hedge fund performance gains in 2017 was around $250bn (£178.5bn).
About 32 per cent of all hedge funds produced double-digit returns in 2017, up from about 23 per cent in 2016. This was based on 2,300 individual hedge funds.
On a risk-adjusted basis, it was found that hedge funds performed better over one, three, five and 10-year periods.
"We already knew that 2017 was a good year for hedge funds, with 11 per cent returns for the average fund and gains in every month of the year," said Jack Inglis, chief executive of AIMA.
"But this new research makes an important contribution to the debate about hedge fund performance over the long-term since it shows that hedge funds have produced consistent and competitive returns for the last 10 years. This of course helps to explain why the industry has consistently expanded and attracted new investor capital since the global financial crisis.”
It was also established that funds which are no longer seeking external capital produced marginally better returns in 2017 than those that remained open to new investments.
Amy Bensted, head of hedge fund products at Preqin said: “Hedge funds have become an important part of institutional portfolios since the GFC a decade ago, and today are helping thousands of pension funds, endowments, sovereign wealth funds and other institutions meet their investment objectives.
"As our results show, hedge funds have proved their value within these investor portfolios over both the short and longer term by providing superior risk-adjusted returns to both bonds and equities on a one, three, five and 10-year time frame.”