E fund managers shook off their blues in 2009 and repaired the damage sustained during the worst phase of the financial storm, according to figures released yesterday.
Gains in December pushed hedge funds to their best annual returns in a decade, more than balancing 2008’s losses. The Credit Suisse/Tremont index closed the year 18 per cent up while the Hennessee Group index ended 24.9 per cent in the black.
The Hennesee number, which was ahead of the S&P500’s increase of 24.7 per cent, suggested hedge fund managers were helped by decreasing levels of volatility and buoyant equity markets.
According to Credit Suisse/ Tremont, convertible arbitrage funds led the pack with a return of more than 47 per cent. Event-driven, long/short equity and emerging markets vehicles also performed well.
Macro-focused strategies were brought down as managers found themselves caught by the reversal in the US dollar, however. A correction in gold and other precious metals also produced losses for managed futures funds.
Managers were said to be optimistic for 2010, feeling that a likely return to fundamentally driven equity markets would make identifying long and short positions easier.
Hennessee co-founder Charles Gradante said the coming year would mark a return to “typical” conditions after two years of extreme turmoil.
He added: “Managers were shellshocked in 2008 as the credit crisis and massive deleveraging caused a major dislocation in several strategies, specifically convertible arbitrage and high yield. In 2009, we witnessed an incredible snapback in these securities, which drove outsized returns.”