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Komfie Manalo, Opalesque Asia:

A new study by research firm Preqin found the hedge fund industry registered its highest number of activist hedge fund launches in 2013 as activism becomes more widely utilized.

In terms of performance, activist funds returned an average of 11.82% in 2013, ahead of the overall hedge fund benchmark which returned 7.88%, the study said.

However, there is an increased volatility associated with these returns, and activist hedge funds have consistently exhibited significantly higher levels of volatility (8-14%) than the industry average (5-10%) over the last five years. This means that risk-adjusted returns for activist hedge funds are lower than the industry average, with the three-year Sharpe ratio (Risk free rate = 2%) as of 30 April 2014 being 0.52 for activists compared to 0.77 for hedge funds overall.

Preqin head of hedge funds products Amy Bensted commented, "Hedge funds using shareholder activism as a method of investment have been a big talking point in the industry in recent years. As activism become s a more widely utilized approach, fund managers are increasingly seeing viable opportunities for investment in this area, with 2013 seeing the highest number of activist fund launches since 2007. These funds appear to be growing in terms of both numbers and size, with Preqin data indicating that activist hedge funds now account for more than $100bn in assets."

The study also......................

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