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Hedge funds wrap 2021 with a 1.26% gain in December and a 10.32% return on the year

Friday, January 14, 2022
Opalesque Industry Update - The hedge fund industry returned to monthly gains in December, returning 1.26% on the month, according to the Barclay Hedge Fund Index compiled by BarclayHedge, a division of Backstop Solutions. By comparison, the S&P 500 Total Return Index was up 4.48% in December.

For the year, the hedge fund industry posted a 10.32% cumulative return for 2021.

"In four of the last five years, the hedge fund industry has delivered a return between 10% and 11%, making 2021's 10.32% return a solid result," said Ben Crawford, Head of Research at BarclayHedge. "As a point of comparison, the S&P500 Total Return Index delivered investors a 28.72% return on the year. On the other hand, hedge funds generally were around 64% less volatile in 2021 than broad equity markets. Therefore, on a risk-adjusted basis, the average hedge fund actually outperformed the S&P500 Total Return Index, if only by a narrow margin."

More than two-thirds of the hedge fund sub-sectors (23/30) posted gains in December. The European Equities Index took top honors for the month with a 4.86% return. It was joined on the podium by the Emerging Markets MENA Index, up 4.25%, and the Equity Long/Short Index which gained 3.31%.

Other notable December gainers included the Option Strategies Index, returning 3.28%, the Emerging Markets Sub Saharan Africa Index, advancing 3.05%, the Equity Long Bias Index, up 2.53%, and the Emerging Markets Latin American Equities Index, gaining 2.27%.

Sub-sectors losing ground in December included the Technology Index, down -1.69%, the Emerging Markets Eastern Europe Index, off -0.66%, the Fund of Funds Index, retreating -0.55%, the Emerging Markets Global Equities Index, down -0.31%, and the Merger Arbitrage Index, losing -0.26%.

All but three hedge fund sub-sectors were in the black for 2021. The Emerging Markets Eastern European Equities Index finished the year on top with a cumulative return of 19.86%, followed closely by the Distressed Securities Index, up 19.01%, and the Equity Long Bias Index which gained 17.52%.

Other 2021 performers of note included the Emerging Markets Sub Saharan Africa Index +15.58%, the Emerging Markets MENA Index +15.46%, the Emerging Markets Easter European Equities Index +13.76% and the European Equities Index which logged a +13.03% cumulative result.

The sub-sectors which ended the year in the red included the Emerging Markets Latin American Equities Index, down -13.16%, the Emerging Markets Latin America Index, off -7.27%, and the Healthcare & Biotechnology Index, losing -2.29%.

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