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Laxman Pai, Opalesque Asia: The Preqin All-Strategies Hedge Fund benchmark returned a net 11.45% in 2019, only the second time in six years that performance has hit double digits.
"Hedge fund performance improved in 2019, but long-term returns lag behind public indices," said the Preqin report.
However, the three-year annualized returns are still well below most public indices. It is still at 6.65%, only half as much as the 13.00% gains made by the S&P 500 in the same period.
Investors remain unsatisfied with performance and have been withdrawing capital from funds - a net $82bn in assets were withdrawn in 2019. Managers are having to adapt to survive in the face of persistent dissatisfaction.
Fee structures are evolving, and managers are consolidating - average management fees are at their lowest level in 10 years, and in 2019, the number of active funds has declined for the first time to 16,256.
To regain investors' confidence, some fund managers have been embracing new technologies like artificial intelligence, which has outperformed the asset class as a whole over the past three years.
Christopher Beales, Executive Editor - 2020 Preqin Global Hedge Fund Report: "2019 hedge fund returns balanced out losses incurred in a tough 2018. But all is not forgiven for the asset class: annualized returns over three and five years trail public indices, and investors remain broadly dissatisfied with the performance of their portfolios."
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