Hedge Funds

Hedge funds post worst year since 2011

Hedge funds posted their lowest annual returns in 2015 in four years, according to data from investment research firm, Eurekahedge.

In a challenging year for investors which saw global stock markets largely fall, the Eurekahedge Hedge Fund Index rose by 1.56 percent, its worst performance since 2011 when it fell by 1.81 percent. In 2014, the Eurekahedge Hedge Fund Index gained 4.64 percent.

The MSCI World Index — a broad indicator of global stock market performance — ended 2015 down 0.48 percent, according to Eurekahedge. The FTSE CNBC Global 300 index closed down 2.70 percent.

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Market turmoil, driven by slumping commodity prices and the rout in Chinese stocks, increased risk-aversion in 2015, but also saw investors seek out different approaches to investment. Total assets under management by hedge funds grew by $110 billion, with more than half of this gain coming from investor flows, according to Eurekahedge.

Big-name poor performers in 2015 included Pershing Square, the hedge fund of billionaire investor William (Bill) Ackman. It clocked up a 20.5 percent loss after Valeant Pharmaceuticals, a top holding, was battered in the second half of the year.

Bill Ackman's Pershing Square lost 20.5% in 2015
Bill Ackman's Pershing Square lost 20.5% in 2015

"The year (2015) began with major dislocations in currency markets, included steep declines for oil and energy commodities, as well as emerging markets, and concluded with rising geopolitical and terrorism threats as well as the first U.S. interest rate increase in nearly a decade," Hedge Fund Research said in a report late last week.