Hedge Funds Did Well in FY12, But Did They Outpace Broader Markets?

December 28, 2012 11:48 AM EST
Hedge fund trades are some of the most-watched events on Wall Street. Try an tell us active traders aren't salivating when notables like David Einhorn, John Paulson, David Tepper, or Leon Cooperman file 13Fs for the quarter.

But, just how well do funds fare in tough markets?

It could be argued that this was an unusual year. The S&P rose from 1,250 at the start, to over 1,450 at its peak, and just about everywhere in between. Gold showed a similar move, starting at $1,500 per ounce, moving above $1,750, and settling around $1,600 per ounce recently.

For 2012, the S&P 500 is up about 12.2 percent. Definitely a strong move, but there were bumps along the way. That comes following a nearly-flat finish in 2011 (the S&P ended about .04 points lower).

According to the Dow Jones Credit Suisse All-Hedge Hedge Fund Index, hedge funds on average are up 4.94 percent through December 27th.

Alternatively, the Barclay Hedge Fund Index is up 6.5 percent through yesterday.

Hedge Fund Research has its HFRI Equity Hedge (Total) Index up 5.65 percent in 2012.

There are plenty more indices around to measure relative performance of the funds. Most any way you slice it, though, hedge funds did worse versus a simple equity index buy-and-hold strategy.

There's always next year...

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