Mon, 14/01/2008 - 06:00
Hedge funds gained 10.40 per cent in 2007 according to year-end data compiled by Fairfield, Iowa-based Barclay Hedge, nearly double the 5.49 per cent return of the S&P 500 Total Return Index.
'Hedge funds have outperformed US stocks in six of the past 11 years,' says Barclay Hedge founder and president Sol Waksman. 'Three of those years were during the bear market from 2000 to 2002. In up years, stocks usually outperform the hedge fund industry as a whole, since hedge funds include both long and short strategies, whereas stock indexes are always 100 percent long.'
The Barclay Hedge Fund Index gained 12.38 per cent in 2006, 10.67 per cent in 2005, 8.80 per cent in 2004 and 17.99 per cent in 2003. 'Since 1997, the Barclay Hedge Fund Index has generated a compound annual return of 13.10 per cent, compared with a 8.15 per cent compound return for the S&P 500,' Waksman says.
Emerging markets was the strongest hedge fund sector last year, with Barclay's Emerging Markets Index gaining 23.63 per cent for the year. 'Emerging markets have been hot, gaining 187 percent over the past five years,' Waksman says.
'There's been the perception for some time that greater value can be found in emerging markets, since their stocks are priced at lower multiples than the G-7 markets. Whether that argument will prevail in 2008 remains an open question.'
All 18 of Barclay's hedge fund indices were in positive territory for last year, and six sectors achieved double-digit returns. Emerging markets gained 23.63 per cent, technology 15.61 per cent, merger arbitrage 13.18 per cent, healthcare and biotechnology 11.96 per cent, global macro 11.65 per cent and equity long bias 10.56 per cent.
Barclay Hedge, previously known as the Barclay Group, was founded in 1985, and actively tracks more than 6,500 hedge funds, funds of hedge funds and managed futures programmes. Barclay has created 18 proprietary hedge fund and eight managed futures indices for use as performance benchmarks by institutional investors, brokerage firms and private banks.
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