2009 was the Best Year for Hedge Funds since 1999

January 17th, 2010
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Hennessee Group LLC released its year end 2009 indices performance report with the conclusion that 2009 was the best year for hedge funds since 1999. The Hennessee Hedge Fund Index overall advanced +24.6% last year, according to a company press release. According to Charles Gradante, Managing Principal of Hennessee, “the top three performing strategies in 2009 included convertible arbitrage, emerging markets and distressed. Of these, we are particularly bullish in distressed in 2010 due to enormous opportunities still remaining and yet to come.”

Hennessee’s Arbitrage/Event Driven Index gained +30.1% last year, pushed by the positive performance of distressed and convertible arbitrage strategies. According to the company, “convertible bond funds benefitted from elevated levels of volatility and a significant contradiction in credit spreads throughout the year.” Merger arbitrage hedge funds, however, did not perform as well as other strategies, gaining only +9.1% in 2009 as “financing was less attainable and deal flow slowed considerably throughout the year.”

After the rally in the equity markets in the latter half of 2009, the Hennessee Long/Short Equity Index finished with a gain of +21.7% for the year. International markets also prospered, particularly in China as “Chinese equity markets benefitted from a favorable economic outlook due to unprecedented government support and a general belief the country will lead the global economy out of recession.” The Hennessee Global/Macro Index overall gained +24.6%. According to the press release, macro managers and strategists in 2009 particularly benefitted from “short positions in the U.S. dollar and treasuries, and long positions in oil and gold.” Mr. Gradante predicts that “the carry trade is likely to remain a popular theme in 2010 among macro managers as policymakers hold rates at historically low levels in developed countries” and that “gold and other precious metals will remain a substantial allocation for hedge funds as a hedge against longer term inflation.”

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Related Article Tags: Multi-Strategy, Long Short, Equity, Debt and Global Macro Hedge Fund News

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