Hedge funds have outperformed the major equity indices over the past year, with the Greenwich Global Hedge Fund Index returning negative 5.1 per cent in October, compared to the S&P 500 Index and MSCI World Equity, which returned negative 16.8 per cent and 19.1 per cent respectively, according to VanMac Group.
Long/short equity managers lost 7.9 per cent in October due to volatile market movements. Short selling managers continued to be profitable, advancing 11.1 per cent on average. Short selling funds have gained 25.6 per cent and have been the best performing sub-sector of the hedge fund strategies.
The credit markets have also hit market neutral funds, which declined 4.6 per cent in October. Convertible arbitrage managers declined 20 per cent, while fixed income or statistical arbitrage lost 5.3 per cent and 0.4 per cent respectively. Distressed, merger arbitrage and special situations managers fell 4.8 per cent on average.
However, directional trading funds advanced 4.9 per cent on average. Future managers were up 6.6 per cent in October, and macro managers had an average performance of 0.3 per cent.
