Hedge funds returns at 11-year-highs in 2020: data

TORONTO (Reuters) – Global hedge funds posted average returns last year of 11.6%, the best year for the industry since 2009, as they took advantage of market volatility due to the pandemic, according to data from industry tracker Hedge Fund Research (HFR).

Hedge fund assets rose to $3.6 trillion at the end of 2020 after adding another $290 billion in the final three months of the year, according to the data.

Firms managing more than $5 billion added $4.8 billion of investor cash between them in the fourth quarter while firms managing less than $5 billion were hit with net outflows.

Stock-picking hedge funds made gains of 17.4% last year while strategies that focused on mergers and acquisitions landed returns of 8.8% and those that bet on macroeconomic events made 5.3%, the data showed.

“Institutions globally are making forward-looking allocations to hedge funds, anticipating and positioning for the near-term uncertainty of the virus containment, as well as intermediate-term macroeconomic uncertainties of the U.S., European and Asian economies into 2021,” Kenneth J. Heinz, President of HFR, said in the release.

While hedge funds enjoyed strong performance during 2020, an index tracking the S&P 500 would have gained 18.4% over the same time period, HFR said.

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