Ten strategies tracked by a hedge fund index outperformed major global indexes and had lower volatility than overall markets, according to HedgeWorld News.
According to a report from Credit Suisse Index Co., the CS/Tremont Hedge Fund Index had returns of 12.1% for year-to-date through Nov. 30, with a volatility of 1.5%.
The MSCI World index grew 8.6% with a volatility of 2.7%, the Tokyo Stock Price Index lost 2.1% with a volatility of 2.1% and the Standard & Poor’s 500 stock index gained 6.8% with a volatility of 2.9%
The Dow Jones EuroStoxx index outperformed the hedge funds tracked by CS/Tremont with a return of 20.1% and a volatility of 3.3%.
Credit Suisse Index cited four major events in 2007 that affected financial markets: The 9% plunge in Chinese equities in February, the collapse this summer of several high-profile hedge funds invested heavily in securities tied to subprime mortgages, the third-quarter hedge fund liquidations due to investor uncertainty and the return of the credit crunch in November, combined with recession fears.
The report found that while some hedge fund strategies suffered during 2007, others capitalized on market turmoil by readjusting their positions and decorrelating from equity markets.