Key highlights for the month:
- Hedge Funds bounced back after muted performance in November, as the Dow Jones Credit Suisse Hedge Fund index rose an estimated 3.01%. Nine out of ten sectors posted positive performance for the month. The industry is expected to finish up 11.07% for the year.
- The Event Driven sector posted the strong performance in December due primarily to increased opportunities in the special situations arena. The largest gains were seen in the Distressed and Multi-Strategy sub-indices which were up 2.34% and 5.27% respectively.
- Global Macro funds were also among the top performers for the month finishing up 2.75%. Managers found profitability in FX trades, where many shorted the USD against other emerging markets currencies. Managers also added alpha via commodities with long precious metal positions.
- Managed Futures funds posted positive performance of 5.50%, helping the sector to recoup November losses. Performance was largely driven by gains from short term models, which were able to capture strong momentum in both equities and commodities.
Strategy Estimates
| Index | Dec-10 | Nov-10 | 2010 |
| Dow Jones Credit Suisse Hedge Fund Index | 3.01% | -0.18% | 11.07% |
| Convertible Arbitrage | 1.14% | 0.04% | 10.95% |
| Dedicated Short Bias | -5.94% | -2.36% | -22.52% |
| Emerging Markets | 1.71% | -0.38% | 11.56% |
| Equity Market Neutral | 2.22% | -2.51% | -0.37% |
| Event Driven | 4.16% | 0.15% | 12.89% |
| Distressed | 2.34% | 0.33% | 9.84% |
| Event Driven Multi-Strategy | 5.27% | 0.04% | 14.90% |
| Risk Arbitrage | 1.24% | -1.44% | 3.26% |
| Fixed Income Arbitrage | 0.63% | 0.74% | 12.50% |
| Global Macro | 2.75% | -0.52% | 13.54% |
| Long/Short Equity | 3.41% | 0.46% | 9.26% |
| Managed Futures | 5.50% | -4.11% | 12.28% |
| Multi-Strategy | 1.79% | 0.30% | 9.38% |
| Dow Jones Global Index | 7.38% | -2.16% | 11.89% |
| Barclays Capital Aggregate Bond Index | 1.31% | -3.81% | 5.54% |
| DJ-UBS Total Return Commodities Index | 10.69% | -0.35% | 16.83% |
Source
Early View: Dow Jones Credit Suisse Hedge Fund Index Estimated Up 3.01% in December