Hedge Funds Finish 2006 with Best Performance 3 Years, But Fall Short of S&P

Hedge Funds

Hedge funds returned 13% globally in 2006, compared with a 15.8% increase (including dividends) by the S&P 500 Index, according to to Hedge Fund Research report today. It was the biggest gain for hedge funds since the 19.6% gain in 2003. 

Hedge funds returned an average 1.6% globally in December, led by gains in emerging markets, according to Hedge Fund Research, reports Bloomberg. 

Other Highlights from HFR:

  • Emerging-market managers were among the most successful in 2006, returning 25.1%.
  • Macro funds, which bet on broad economic trends finished with an 8.8% gain. 
  • Funds focused on the boom in mergers and acquisitions had gains of 15.4%.
  • Funds that sell securities short fell 2% last year, the only 12-month decrease of a single-strategy fund tracked by HFR. 
  • Equity hedge funds returned 11.7%.


HFRI Monthly Performance Indices (%)

Strategy Dec'06 2006
HFRI Fund Weighted Composite Index 1.56 12.99
HFRI Emerging Markets (Total) 4.08 25.13
HFRI Merger Arbitrage Index 1.51 16.13
HFRI Sector (Total) 0.62 15.71
HFRI Event-Driven Index 1.77 15.42
HFRI Distressed Securities Index 1.22 15.26
HFRI Relative Value Arbitrage Index 1.79 12.59
HFRI Convertible Arbitrage Index 1.35 12.25
HFRI Equity Hedge Index 1.46 11.74
HFRI Fund of Funds Composite Index 1.68 10.33
HFRI Fixed Income (Total) 0.81 8.78
HFRI Macro Index 1.81 8.75
HFRI Equity Market Neutral Index 1.15 7.86

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