Hedge funds are faring well after years of lackluster results, but the returns have not been uniformly strong. A closer look at the returns shows a range of results within strategies and even substrategies. For example, data from Hedge Fund Research’s subindices show that returns for the equity hedge strategy through September have ranged from as high at 17% for funds with a technology focus to as low as minus-2% for value-oriented funds.
As expected, funds specializing in hot sectors such as health care, as well as technology, have outperformed the S&P 500 Index. But other funds have also done well, demonstrating benefits of both a targeted approach in the case of sector-specific allocations and a diversified approach. Hedge funds, after all, are designed to benefit from volatile markets. With more fluctuations likely in the coming months, hedge funds’ strong run may not be over.
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