Barclay Hedge Fund Index 2007 Returns Exceed 10%

by Carla Johnson, Investors Offshore.com

15 January 2008

Hedge funds gained 10.4% in 2007, nearly double the 5.49% return of the S&P 500 Total Return Index, according to year-end data compiled by hedge fund performance tracker Barclay Hedge.

The results mean that hedge funds have outperformed US stock markets in six of the past 11 years, three of which were in the bear market of 2000 to 2002, according to Sol Waksman, founder and president of Barclay Hedge.

“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% long," he noted in announcing the annual performance figures of the Barclay Hedge Fund Index, which tracks more than 6,500 hedge funds, fund of hedge funds, and managed futures programs.

The Barclay HFI's return of 10.4% in 2007 extended gains of 12.38%, 10.67%, 8.80%, and 17.99% during the previous four years.

Emerging Markets was the strongest hedge fund sector in 2007, with Barclay's Emerging Markets Index having gained 23.63% for the year.

“Emerging Markets have been hot, gaining 187% over the past five years,” observed Waksman, continuing:

“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.

In addition to Emerging Markets, 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%.

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