Hedge funds lost 0.64 per cent in December according to the Barclay Hedge Fund Index compiled by BarclayHedge. The Index was up 0.29 per cent at the end of 2015, its smallest yearly gain since 2011 when it declined 5.48 per cent.
The Index was unable to outperform the S&P 500 Total Return Index, which gained 1.38 per cent last year.
“The year ended on a down note for risk assets as investors pondered the implications of slowing growth after several years of tepid recovery,” says Sol Waksman (pictured), founder and president of BarclayHedge.
Eleven of Barclay’s 18 hedge fund indices lost ground in December. Distressed Securities were down 1.54 per cent, Equity Long Bias lost 1.35 per cent, the Global Macro Index was down 1.08 per cent, Convertible Arbitrage lost 0.96 per cent, and the Emerging Markets Index gave up 0.59 per cent.
“Lead by a ten percent decline in oil, commodity markets remained under selling pressure. The impact of the continued drop in oil prices also weighed heavily on energy related equities, currencies of commodity exporting nations, and high yield debt which finances fracking operations in the US,” says Waksman.
On the positive side, the Merger Arbitrage Index was up 1.20 per cent in December, Pacific Rim Equities gained 1.07 per cent, European Equities were up 0.79 per cent, Healthcare and Biotechnology gained 0.64 per cent, and the Equity Market Neutral Index added 0.55 per cent.
Four hedge fund indices led all strategies in 2015. The Merger Arbitrage Index gained 7.88 per cent, Pacific Rim Equities were up 7.69 per cent, Healthcare and Biotechnology gained 7.09 per cent, and Technology was up 7.05 per cent.
The Merger Arbitrage Index has been a consistent winner since 1997, with gains in 17 of the past 19 years. The only annual losses were a 0.10 per cent slide in 2002, and drop of 3.38 per cent in 2008.
At the end of December, the Distressed Securities Index was down 9.86 per cent for the year, Equity Short Bias lost 6.54 per cent, Emerging Markets lost 2.68 per cent, and the Event Driven Index was down 2.55 per cent.
The Barclay Fund of Funds Index was down 0.60 per cent in December, and ended the year with a 0.06 per cent loss.
