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Hedge fund managers bring their 2021 return to 9.49%

Friday, January 21, 2022
Opalesque Industry Update - Hedge fund managers reversed losses in November and gained 1.01% in December, bringing their 2021 return to 9.49% - the second best annual performance since 2010. Hedge funds were supported by the robust performance of the global equity market as represented by the MSCI ACWI (Local) which returned 3.55% over the month. Around 75.8% of the constituents of the Eurekahedge Hedge Fund Index generated positive returns in 2021.

On an asset-weighted basis, hedge funds gained 1.86% in December, as captured by the Eurekahedge Asset Weighted Index - USD. In terms of 2021 performance, the index is only up 4.29%, highlighting the struggles for some of the larger asset managers over the year.

The Eurekahedge North American Hedge Fund Index gained 1.79% in December, supported by the robust performance of the DJIA and S&P 500 which gained 5.38% and 4.36% respectively over the month. In terms of 2021 performance, North American fund managers were up 14.46%, posting their second consecutive year of double-digit returns.

The Eurekahedge European Hedge Fund Index gained 1.62% in December, supported by the robust performance of the pan-European Euro Stoxx 50 which gained 5.79% over the month. Investors brushed aside concerns over the surge in Omicron cases as evidence suggests the Omicron variant leads to lower rates of hospitalisation and death. In terms of 2021 performance, European fund managers were up 8.43%, posting their best annual performance since 2013.

The Eurekahedge Asia ex-Japan Hedge Fund Index was up 0.63% in December, bringing its 2021 performance to 7.27%. In contrast to their strong performance in 2020 when they outperformed their European and North American peers by 18.48% and 6.42% respectively, Asia ex-Japan hedge funds have underperformed their developed market peers in 2021 as Greater China hedge funds who were the primary index performance driver in 2020 failed to sustain their strong returns in 2021 as reflected in their -0.03% loss for the year.

The Eurekahedge Long Bias Hedge Fund Index gained 2.57% in December, rebounding strongly from a -2.35% loss suffered in the previous month. In terms of 2021 performance, long bias fund managers were up 12.96%, posting their third consecutive year of double-digit returns.

The Eurekahedge Long Short Equities Hedge Fund Index gained 1.57% in December, rebounding strongly from a -1.55% loss suffered in the previous month. In terms of 2021 performance, long/short equities fund managers were up 10.80%, posting their third consecutive year of double-digit returns.

The CBOE Eurekahedge Short Volatility Hedge Fund Index gained 2.29% in December, supported by the decline in market volatility as seen in the -36.67% decline in the CBOE VIX in December as encouraging news around the reduced severity of the Omicron variant assuaged investors' concern that the global economic recovery would be derailed. In terms of 2021 performance, short volatility fund managers were up 14.73%, posting their highest annual return since 2009.

The Eurekahedge CTA/Managed Futures Hedge Fund Index gained 0.57% in December, supported by the strong returns of the S&P GSCI Index which gained 7.59% over the month. Improving crude demand and dwindling US crude inventories allowed oil to recover some of their November losses as the prices of Brent crude oil and West Texas intermediate crude oil surged 10.11% and 12.09% respectively. In terms of 2021 performance, CTA/managed futures hedge funds were up 6.66%, marking their third consecutive year of positive returns above 5.00%.

Fund managers focusing on cryptocurrencies declined -14.93% in December as tracked by the Eurekahedge Crypto-Currency Hedge Fund Index, outperforming Bitcoin which fell -18.51% over the same period. In terms of 2021 return, cryptocurrency hedge funds have gained 133.78%, outperforming Bitcoin which returned 63.82%.

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