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Alternative Market Briefing

Smaller managers suffer from investors' bias toward bigger managers despite good returns

Thursday, April 22, 2010

From the Opalesque team: Hedge funds have not really, in general, outperformed the equity markets in 2009 nor in the first quarter of this year. The Hennessee Hedge Fund Index ended 2009 up 24.85%, and the HFRI Fund Weighted Composite Index up 20.04%, compared with the S&P 500 at 24.71% (26.47 % with dividends) and the Dow Jones Industrial Average at 18.82% during the same period.

The Hennessee Hedge Fund Index is now up 3.50% YTD (to end-March) and the HFRI Fund Weighted Composite Index is up 2.56% YTD, compared to 4.87% for the S&P500 and 4.11% for Dow Jones Industrial Average.

But positive gains by hedge funds have not gone unnoticed by investors who are returning to the industry as reported the New York Times.

A recent report by Fitch Ratings also said that hedge funds are benefitting from renewed interest from institutional investors, who believe the industry provide better returns compared with straight equity or credit market investments.

In fact, a survey amongst 60 managers conducted by New York-based information services company Infovest21 in early April this year, has found that the highest performers last year were the smallest managers or those with under $100m in AuM. These ......................

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