The Scotia Capital Canadian Hedge Fund Performance Index finished December 2009 up 2.12 per cent on an asset weighted basis and up 2.59 per cent on an equal weighted basis.
The index outperformed broader hedge fund indices both on an asset and equal weighted basis.
The index finished 2009 up 28.62 per cent on an asset weighted basis and up 26.31 per cent on an equal weighted basis, significantly outperforming broader hedge fund indices on the year.
In closing out its best year since inception, the index returned close to its peak level of June 2008.
Global equities continued to rally through December to end 2009 on a strong, positive note. The year was characterized by an overall return of investor risk appetite, as central banks’ efforts to stimulate economic growth resulted in economic stabilization, and market participants ultimately refocused on higher risk securities as interest rates were kept low.
In the US, the S&P 500’s 1.78 per cent December gain was led by technology, utilities and telecom.
In Canada, nine of ten sectors contributed positively to the TSX’s 2.61 per cent gain, with the strongest outperformance from the technology sector. Canadian energy stocks also made notable advances, benefitting from the strong rally in oil after its initial decline in early December, as well as from the increase in demand pushing natural gas prices up in light of unusually low temperatures across North America.
In December FX themes, the CAD appreciated against the USD, juxtaposed against the USD rally versus broader currencies.
Gold-related equities were among the decliners, retracing after gold hit another record high earlier in the month, and ultimately declined against the USD rebound.
Other commodities generally advanced in December as investors continue to show optimism for further economic recovery.
Canadian hedge fund managers advanced overall in December, making gains from selective stock-picking across sectors as well as from nimble trading. Compared to discretionary traders, managers with systematic strategies were generally challenged by December’s subdued volatility in equities and sideways trading in commodities and FX.