Hedge funds recorded a -0.23% return in December amid volatile market conditions and trend reversals that persisted into the last month of 2011. The Eurekahedge Hedge Fund Index was down 4.15% for the year, making it the second worst yearly return on record. Hedge funds continued to outperform the MSCI World Index, which was down 0.40%1 in December and 9.9% for 2011. The outperformance was led by the larger funds as evident from positive figures posted by the Mizuho Eurekahedge Top 100 Index, which was up 1.87% in 2011.
Most regional hedge funds delivered gains in December while distressed debt hedge funds brought in the highest percentage gain for the month among the different strategic mandates. Latin America was the top performing hedge fund region in 2011 while fixed income mandates saw the highest returns among strategies.
December 2011 and November 2011 returns
December results were mixed across the different regions with Japanese hedge funds delivering the best returns with gains of 0.95% for the month, bringing the 2011 figure to -1.27%. Comparatively the Tokyo Topix was flat in December and declined 18.9% for the year. Long positions in the chemicals and pharmaceutical sectors helped Japanese managers during the month. Japanese managers have provided significant downturn protection in 2011 by reducing their net and gross exposures amid times of uncertainty and market declines.
Among other regions, Latin American hedge funds ...