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Opalesque Industry Update - Hedge funds opened 2012 by posting broad-based gains in January, with the HFRI Fund Weighted Composite Index gaining +2.63 percent, the second highest monthly performance figure since December 2010, according to data released today by HFR, the leading global provider of data, analysis and indexation of the hedge fund industry.

Equity Hedge strategies performed the strongest in January, with the HFRI Equity Hedge Index gaining +3.84 percent, led by Fundamental Growth, Value and Energy/Basic Materials sub-strategies. Event Driven and Relative Value Arbitrage strategies posted gains of +2.4 percent and +2.3 percent, respectively, with contributions from ED: Special Situations and Activist funds, as well as RV: Yield Alternative and Convertible Arbitrage exposures. Macro strategies posted a gain of +1.1 percent, with strong contributions from Discretionary strategies, and complemented by gains in quantitative, trend-following strategies. Both Currency and Commodity focused funds posted January gains despite underlying asset volatility; the HFRI Macro: Systematic Diversified Index posted a gain of +0.32 percent. The lone sub-strategy of negative industry performance was Equity Hedge: Short Bias, which declined by -8.3 percent in January, following a +0.4 percent gain in FY2011.

After trailing other strategies in 2011, hedge funds investing in Emerging Markets experienced a sharp reversal to start 2012, with the HFRI Emerging Markets Index gaining +5.3 percent, its strongest performance since May 2009, when it returned +9.6 percent. Hedge funds focusing on Russia/Eastern Europe and Latin America exposures led EM performance, with these gaining +9.2 and +6.9 percent, respectively.

“January performance for hedge funds was driven by a number of positive factors, with these generally constituting a reversal of the cyclically high levels of risk aversion which influenced not only fundamental asset price convergence, but also capital allocations by leading investors throughout 2011,” said Kenneth J. Heinz, President of HFR. “While equity markets are off to a strong start, investors should remain cognizant of the dynamic risk environment across currencies, commodities, strategic acquisitions, fixed income and emerging markets which will continue to create opportunities both long and short throughout 2012.”

(press release)

About HFR
HFR (Hedge Fund Research, Inc.) is the global leader in the alternative investment industry. Established in 1992, HFR specializes in the areas of indexation and analysis of hedge funds. HFR Database, the most comprehensive resource available for hedge fund investors, includes fund-level detail on historical performance and assets, as well as firm characteristics on both the broadest and most influential hedge fund managers. HFR has developed the industry’s most detailed fund classification system, enabling granular and specific queries for relative performance measurement, peer group analysis and benchmarking. HFR produces over 100 indices of hedge fund performance ranging from industry-aggregate levels down to specific, niche areas of sub-strategy and regional investment focus. With performance dating back to 1990, the HFRI Fund Weighted Composite Index is the industry’s most widely used standard benchmark of hedge fund performance globally. The HFR suite of Analysis Products leverages the HFR Database to provide detailed, current, comprehensive and relevant aggregate reference points on all facets of the hedge fund industry. HFR also offers consulting services for clients seeking customized top-level or more nuanced analysis. For the hedge fund industry’s leading investors and hedge fund managers, Hedge Fund Research is The Institutional Standard. Full press release: Source
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