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Hedge funds finished up 2.42 per cent in 2015

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Hedge funds finished last year up 2.42 per cent, beating equities and bonds on an absolute and risk-adjusted basis, according to an analysis of performance data by the Alternative Investment Management Association (AIMA).

AIMA says the analysis, based on returns reported to HedgeFund Intelligence (HFI) by funds with total assets under management (AUM) of roughly USD1.1 trillion, represents one of the most comprehensive assessments of the global hedge fund industry’s performance last year.
 
The analysis includes the first measurement of the industry’s risk-adjusted performance in 2015. Risk-adjusted returns are closely watched by institutional investors such as pensions and endowments since they measure both the total return and the volatility of those returns. AIMA’s analysis also contains an extensive breakdown of returns by the different hedge fund investment strategies.
 
According to AIMA,edge funds on average outperformed stocks and bonds on both a headline and risk-adjusted basis. Around two-thirds of funds (65.30 per cent) reported positive returns, while risk-adjusted returns were positive, as measured by a Sharpe ratio of +0.52. The best performing strategies were equity market neutral/quant (up 10.44 per cent), long/short equity (up 6.79 per cent) and multi-strategy (up 5.65 per cent).
 
Jack Inglis (pictured), CEO of AIMA, says: “While 2015 will not be remembered as a vintage year for the industry, the majority of hedge funds still produced positive returns amid challenging market conditions, beating stocks and bonds on both an absolute and risk-adjusted basis and preserving capital for pension funds and other investors. Given that this period of market volatility is set to continue during 2016, we remain confident that hedge funds will continue to meet their investors’ expectations for competitive, diversified and low-volatility returns.”

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