Hedge funds up, but gold, EM and Asia ex-Japan up more in past decade, says SFA

Research conducted on behalf of the Swiss Funds Association (SFA) suggests that hedge funds did outperform equities in the past decade, but that gold, emerging markets and Asia ex-Japan did even better.

Hans-Jörg Baumann, CEO of Swiss Capital Alternative Investments AG and head of the SFA’s Alternative Investment Council, presented the figures at an “Industry and Market Update”.

According to the data, the HFRI Fund Weighted Composite index returned 88.3% in the past ten years. Over the same period the MSCI Europe index lost -28%.

However, over the same period gold was up 456.7%, emerging market equities were up 250.2%, and Asia ex-Japan was up 183.7%.

Additionally certain government bonds represented by the SB High Yield index were up 130.1%.

“We are still in a difficult market environment, with the risk-free rate around zero and liquidity asymmetric and expensive. The current developments in several G-10 countries are pointing to recession, and investors are tending towards security and capital preservation. The time intervals for investment decisions are also getting increasingly shorter. Managers that pursue an active investment style, such as those of hedge funds, are prepared for this and can deal with such an environment,” said Baumann.

In the first nine months of 2011, hedge funds returned -4.8% against -20.9% for European equities, he added.

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