Neighbor News
Hedge Fund Industry Produces Negative Aggregate Return for 2015, But Pockets of Strong Performance Too
While a challenging year for hedge fund investors, making the right bets with the right hedge fund managers paid off for some investors.
December’s -0.77% aggregate hedge fund industry return pushed annual aggregate returns further negative, ending at -2.01% for the year, but some sectors performed strongly.
Despite overall industry returns being negative in 2015, the distribution of returns across funds was nearly even in terms of the availability of positive vs. negative annual performance (49% positive, 51% negative). The average positive return was 8.12% and the average negative return was -9.87%. The implication being that within many universes, good relative performance was available, providing hedge fund managers made the right investment bets and investors put their money with the right managers.
Some interesting points from the report, according to report author and eVestment Vice President and Head of Research Peter Laurelli, include:
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· Russia and then China ended 2015 as two of the most profitable segments of the hedge fund industry. After more than a year of rising tensions with the West took a toll on Russian investments, Russia-focused funds saw an average gain of +9.06% in 2015. This did not, however, come close to erasing 2014’s massive -40.77% decline. For China-focused funds, the year’s gains followed similar gains in 2014, but have also preceded what has likely been a very difficult start to 2016.
· The year ended with emerging market hedge funds producing a positive Q4, despite a half-percent decline in December. The +1.80% rise in Q4 2015 follows a -10.50% decline in Q3, the universe’s largest quarterly loss since 2011.
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· Market neutral equity funds (MNEq) were a bright spot for the industry in 2015. Average returns were only +2.60%, but 62% of funds were positive and performance was skewed more positive than most.
· Managed futures funds ended 2015 with negative aggregate returns at -2.66%. This was the universe’s fourth annual aggregate decline in five years.
· Distressed funds had a negative December (-2.95%), a very difficult Q4 (-4.58%), and ended 2015 at -8.75%, the sector’s second worst year on record behind 2008.
To download a full copy of the report, please click here.
