EUROPE - The majority of hedge funds delivered better returns than the S&P 500 index over a three-year period, according to latest figures by EDHEC Business School.
EDHEC analysed performance data for a number of investment strategies - including convertible arbitrage, CTA global, equity market neutral and long/short equity - and found that distressed securities offered the highest returns, closely followed by convertible arbitrage.
Author of the study, Patrice Retowsky, said a “wave of optimism” had struck the stock market in December 2010, followed by a 6% increase in the S&P 500, which gained 15% over the entire year, rising to pre-crisis levels.
“Taking advantage of the persistent growth in the stock market, all equity-orientated strategies scored a fourth consecutive month of profits,” he said.
“The Long/Short Equity and Event Driven strategies ended the year with rarely attained monthly performances [of 3.56% and 2.97%, respectively].”
Commodities also saw renewed growth, ending the year with close to 10% returns and reaching levels not seen since the collapse of Lehman Brothers.
Howevern, long/short equity boasted the best returns of all hedge fund investment strategies in the fourth quarter of 2010, growing by 28.3%, outperforming its closest rival by almost 5 percentage points - well ahead of CTA Global, which came last and only returned 10.3%.
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