Investing January 10, 2002

Hedge Fund Returns 'Off', But Still Beat Stocks

January 10, 2002 (PLANSPONSOR.com) - Despite posting their worst performance since 1996, hedge funds still outperformed global equity markets, according to early data from Allenbridge Hedge Info.

Reported by

Camilla Klein

The tracking company estimates that, in contrast to double-digit returns in previous years, last year single-manager funds rose 4% and funds of funds gained 3.6%, based on the 2,100 funds worldwide measured by the London-based Allenbridge.

Although gains were modest, hedge funds outperformed:

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· the S&P 500, which lost close to 12% on a year-to-date basis,
· the Dow Jones Industrial Average, which falling by over 7%, and
· the UK’s blue-chip FTSE 100, which ended its worst year ever, down 16.2%,

While the number of funds has risen to more than 6,000 with an estimated $500 billion under management, due to rising interest from investors, the number of funds falling by the wayside has also increased, according to a report from Reuters.

Nevertheless, the popularity of hedge funds showed little sign of abating, although Allebridge predicts that the industry would shy away from trying to achieve stellar returns and opt for a more conservative style instead.

Final figures for 2001 are due to be released later this month.