FAIRFIELD, Iowa, January 11, 2008 – Hedge funds gained 10.40% in 2007 according to year-end data compiled by Barclay Hedge, nearly double the 5.49% return of the S&P 500 Total Return Index.
“Hedge funds have outperformed US stocks in six of the past 11 years,” says Sol Waksman, founder and president of Barclay Hedge. “Three of those years were during the bear market from 2000 to 2002.”
“In up years, stocks usually outperform the hedge fund industry as a whole, since hedge funds include both long and short strategies, whereas stock indexes are always 100 percent long.”
The Barclay Hedge Fund Index returned 10.40% in 2007, extending gains of 12.38%, 10.67%, 8.80%, and 17.99% during the previous four years.
“Since1997, the Barclay Hedge Fund Index has generated a compound annual return of 13.10%, compared to a 8.15% compound return for the S&P 500,” says Waksman.
Emerging Markets was clearly the strongest hedge fund sector in 2007. Barclay's Emerging Markets Index gained 23.63% for the year.
“Emerging Markets have been hot, gaining 187 percent over the past five years,” says Waksman.
“There's been the perception for some time that greater value can be found in emerging markets, since their stocks are priced at lower multiples than the G-7 markets. Whether that argument will prevail in 2008 remains an open question.”
All of Barclay's 18 hedge fund indices were in positive territory at the end of 2007, and six sectors had double-digit returns.
Emerging Markets gained 23.63%, Technology rose 15.61%, Merger Arbitrage was up 13.18%, Healthcare and Biotechnology gained 11.96%, Global Macro was up 11.65%, and Equity Long Bias gained 10.56%.
Click here to view five years of Barclay Hedge Fund Index data, or download 11 years of monthly data.
Sol Waksman is an experienced media source, providing perspectives on hedge fund and managed futures trends. For more commentary or background, call 641-472-3456 or email sol@barclayhedge.com.
Barclay Hedge, formerly known as The Barclay Group, was founded in 1985, and actively tracks more than 6,500 hedge funds, fund of hedge funds, and managed futures programs. Barclay has created and regularly updates 18 proprietary hedge fund indexes and eight managed futures indexes.
Institutional investors, brokerage firms and private banks worldwide utilize Barclay’s data as performance benchmarks for the hedge fund and managed futures industries.