Hedge funds post comeback in 2009

Congratulations to hedge funds, which were upwardly mobile in every strategy last year.

It's official. Hedge funds are back.

Hedge Fund Research Inc (HFRI) and Eurekahedge say their annual reports for 2009 show that hedge funds were up for the 12-month period, with HFRI recording industry returns of 20.04% and Eurekahedge reporting returns of 19.16%. The figures redress the woes of 2008, when hedge funds were down 19% according to HFRI and off 11% according to Eurekahedge. The turnaround began this time last year when hedge funds showed the first positive returns since May 2008.

Funds of hedge funds were also up, by 9.5% for the year, in the wake of a 19.7% fall in 2008.

However, both pale in comparison to long-only managers, which were up 47% last year.

Asia ex-Japan strategies were up 38%, and even Japan managed a 6.8% increase. Neither were the top regional strategy though -- that honour fell to Russia and Eastern Europe, which was up 60%.

The most successful hedge fund strategy for 2009, according to both research firms, was (drum roll) event-driven. That strategy took top honours, with a 38% haul according to Eurekahedge and 25.9% by HFRI's measure.

Taking silver medal was distressed debt, with 37%, says Eurekahedge, but HFRI put relative value in second spot, with 25.8%. Eurekahedge has relative value in bronze-medal position, with 23.1%, while HFRI's third spot was claimed by equity hedge, with 25.07%.

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