Hedge funds withstand New Year strain

Hedge fundHedge funds have responded well amid wide market fluctuations at the beginning of 2015, according to a report by French asset management firm Lyxor.

The start of the year saw a high degree of volatility among all asset classes fuelled by continued concern over oil prices.

Equities fell as economic activity dropped in December, compounded by seemingly endless Eurozone woes as a Greek exit once again becomes a real possibility.

The report also says that commodity trading adviser funds performed strongly on short commodities and long dollar trades. However, it hasn't been plain sailing across the board as event-driven funds failed to bring uncorrelated returns and were still hurt by their energy sector exposure at the start of this year.

Similar good news for the hedge fund industry comes from the Eureka Hedge Fund Index that was up 0.25% in December while the MSCI World Index finished the month down 0.8%. Oil was a deciding factor for the performance of hedge funds domiciled in certain jurisdictions, with Russian hedge funds seeing a sixth consecutive month of losses in December being heavily dependent on oil exports, while Indian funds outperformed the market with gains of 39.1%.

However, despite the optimism regarding the hedge fund industry, SS&C GlobeOp says hedge fund flows declined 2.95% in January, on the back of a 0.43% advancement in December of last year. SS&C GlobeOp's data represents 10% of the hedge fund industry's asset under management.

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