Hedge Funds Hit a High Note: 2009 Industry Review

Credit Suisse Tremont Index LLC released a new research piece, “Hedge Funds Hit a High Note: 2009 Industry Review,” that examines hedge fund performance in 2009 with a focus on the key factors that contributed to the turnaround seen in the industry last year.

2009 marked the best annual hedge fund performance in a decade (as measured by the Credit Suisse/Tremont Hedge Fund Index “the Index”) and the greatest performance rebound since inception of the Index in 1994. The report examines the key return drivers in the industry in 2009 and explores some of the noteworthy trends which have developed as a result of the current market dislocation. Overall, the Index was up nearly 19% with 83% of all funds posting positive performance as of December 31, 2009.

Some key conclusions from the report include:

— Overall, hedge funds have recouped 77% of 2008 losses from previous peak performance levels or “high water marks.”

— An estimated 58% of all “impaired” assets have returned to standard liquidity status, representing a total of $102 billion. An additional $72 billion in impaired assets currently remain illiquid.

— The hedge fund industry experienced net inflows of $12 billion in the fourth quarter; however, overall the industry lost $74 billion as a result of investor redemptions in 2009.

— Including performance gains, current industry assets under management are estimated at $1.5 trillion as of December 31, 2009.

— The percentage of closed funds in the industry has dropped from 17% to 13% since November 2007, signifying increased investor access to some of the industry’s most in-demand managers.

In addition, Credit Suisse Tremont LLC has also published a new monthly commentary which offers insight into December hedge fund performance. All industry commentaries and publications are available in the Research section on www.hedgeindex.com.

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