Hedge fund returns diverge in 2015

Business analyticsHedge funds narrowly missed making a positive return in 2015 – a year in which volatility led to a wide divergence of performance. However, some data also suggests a positive return was made. Much depends on the data provider, though nobody doubts last year was a difficult year, when overall returns were lower than in 2014. HFR’s Fund Weighted Composite Index, which reflects the returns of a wide range of strategies, was down 0.85% for 2015, net of fees. The S&P 500 fell 0.73% in 2015, on a total-return basis. Despite the losses, 55% of the hedge funds HFR measured managed to outperform. Meanwhile, another major hedge fund index reports positive performance for the industry. The Eurekahedge Hedge Fund Index rose 1.56% in 2015 – though this was still the lowest annual return since 2011 and compares to an increase of 4.64% in the previous year. Eurekahedge’s returns were based on 37% of 2,831 hedge funds reporting (at January 12). HFR’ returns are based on 2,100 funds, though it wasn’t clear at time of writing if all reported. The positive 1.56% return that Eurekahedge reports looks even more favourable when set against the mainstream index it uses to compare returns, which is the MSCI World, and which fell 0.48% for the year. “Low interest rates, steep commodity losses and intense equity market volatility contributed to a challenging environment in 2015, resulting in a wide dispersion between the best and worst performing funds, and a narrow performance decline for the overall hedge fund industry,” said Kenneth J. Heinz, of performance data provider, HFR. Eurekahedge data shows that distressed debt funds were the worst performers in 2015. The 5.13% loss was the worst on record. Similarly, HFR reported a loss of 8.4%, the worst year since 2008. Conversely, merger arbitrage investors saw a full-year gain of 3.4%, their strongest year since 2013, said HFR. Flows into hedge funds declined 2.77% in January, according to SS&C GlobeOp, which covers 10% of the industry. However, this is a seasonal move, the firm says. Eurekahedge says half of the $110 billion (€101 billion) increase in hedge fund assets under management in 2015 was from investor flows. ©2016 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.