Hedge Funds Rocket in 2001

January 16, 2002 (PLANSPONSOR.com) - In the face of equity market weakness, hedge funds proved a better bet for investors in 2001 - the average US hedge fund rising by 5.6% net of fees over the year, according to data from Van Hedge Fund Advisors International.

Offshore hedge funds performed even better than their domestic counterparts, averaging a 7% net gain for the year. 

In comparison, in 2001:

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  • the Dow Jones Industrial Average lost 5.4%
  • the S&P 500 fell by 11.9%
  • the Nasdaq composite fell by 20.8%.


In addition, the Van US Hedge Fund Index:

  • advanced 1.6% net in December
  • increased by 6.0% net over the fourth quarter.

Similarly, the Van Offshore Hedge Fund Index:

  • rose 1.3% net last month
  • to end the fourth quarter up 4.8%.


For December, the best performing strategies were:

  • Offshore Emerging Markets, increasing by 5.1%
  • US Emerging Markets, up by 4.6%
  • US Aggressive Growth, which tied with Offshore Special Situations with a return of 2.9%.

Over the fourth quarter of 2001:

  • Offshore Emerging Markets funds led with an average 17.0% net gain
  • Technology sector funds, which rallied over the quarter, increasing by 14.2%
  • US Emerging Markets funds, which rose by 13.8%.

Over 2001, the most successful hedge fund strategies were:

  • US Distressed Securities – funds that invest in ailing companies, which rose 16.1%
  • Offshore Short Selling – funds that bet on falling stock prices, which increased by 15.8%
  • US Emerging Markets, which managed a 15.7% return.