New York (HedgeCo.Net) – Although hedge funds finished up 2008 with some of the worst numbers to date, they showed some signs of promise in December. According to the latest research by the Hennessee Group LLC, a New York-based advisor to hedge fund investors, hedge funds advanced .51 percent in December.
Hedge funds finished up the year down 19.15 percent according to the research. Although it was a dismal year for funds as a whole, they still outperformed the S & P, which was down 38.5 percent on the year, the Dow Jones, who dropped almost 34 percent, and the NASDAQ Composite Index, which posted a 40 percent drop on the year.
One challenge for hedge funds in 2008 was the record number of redemption requests
brought on by clients. Large hedge funds such as Citadel, Harbinger and Cerberus, along with about 80 others, had to put some form of restrictions on client withdrawals.
“Year-end redemptions were significant, as the average fund returned 15% to 25% of investors’ assets. Combined with negative performance and complete liquidations, the entire hedge fund industry started 2009 at close to 50% of the capital it was at the beginning of 2008,” said Charles Gradante, Co-Founder of the Hennessee Group. “However, this should be a positive for funds as less capital will be chasing the same long/short trades, which should lead to better returns.”
The Hennessee Long/Short Equity Index saw a .31 percent advance in December, while the year to date was down over 18 percent. The Global/Macro Index rose .61 percent in December, although taking an almost 21 percent hit for the year. The Arbitrage/Event Driven Index, which was down 18.5 percent on the year, advanced 1 percent in December.
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