Listed hedge funds have outperformed the S&P 500, the HFRI Fund Weighted Composite index and the HFRI Fund of Funds index, according to research from alternatives investment bank Dexion Capital.
The analysis compared the returns from single manager listed hedge funds against the indices peak-to-peak from November 2007, the last market peak, through to August 2014, the current market peak.
Over the period, the S&P 500 has generated total returns of 50.3 per cent (6.1 per cent pa), HFRI’s Fund Weighted Composite has returned 20.6 per cent (2.8 per cent pa) and the Fund of Funds Composite index returned 1.3 per cent (0.2 per cent pa).
The peak to peak NAV returns of the listed funds that have a track record starting at or before November 2007, show that all funds beat the average hedge fund returns recorded by HFRI and only one fund failed to beat the S&P 500.
According to Dexion Capital’s analysis, the best performing funds over the period have been Third Point (11.1 per cent pa), BlueCrest BlueTrend (8.9 per cent pa), BH Macro (8.8 per cent pa) and BlueCrest AllBlue (8.6 per cent pa). Since its track record in April 2008, BH Credit Catalysts has returned 12.9 per cent pa since then, against the S&P up 8.9 per cent. Furthermore, NAV volatility has been much lower than equity markets.
The analysis notes that a possible reason for this outperformance is that the quality of the listed single manager hedge fund universe is above-average, with only the best managers able to launch funds with requisite scale. This is certainly reflected in the sector’s performance.