The first nine months of 2022 have been exceptionally challenging for the global financial markets, with rising geopolitical tensions, inflation, interest rates, recession concerns and the emergence of new, more transmissible variants of Covid-19 among an evergrowing list of worries that investors must grapple with, causing a spike in market volatility that has seen the CBOE Volatility Index rise 83.6% this year. Against this backdrop, the average healthcare hedge fund declined 22.1%, a disappointing return but still superior to the 24.8% fall of the S&P 500. Nevertheless, healthcare hedge funds have performed exceptionally well over the long-term. Since the end of 1999, the Eurekahedge Healthcare Hedge Fund Index has generated an annualized return of 10.9%, outperforming the Eurekahedge Technology Hedge Fund Index (9.1%), Eurekahedge Hedge Fund Index (8.2%), S&P 500 (4.0%) and NASDAQ Composite (4.3%).
With the Covid-19 pandemic driving increased global awareness of the importance of effective pandemic preparedness, aging demographics across most developed countries and healthcare's generally low correlation with global macro conditions, healthcare hedge funds are well-placed to capitalize on these trend to grow returns and fortify their investments.
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