Last year was a tough one for hedge funds.
A recent Citi survey found hedge fund profits down for the year about $US10 billion dollars — or 30 per cent — from the year prior, and indexes from research firms eVestment and Preqin put hedge fund returns up around 3 per cent — just a fraction of the S&P 500’s 13.7 per cent return.
But there were of course some winners.
Here are some common traits that last year’s top performing funds shared, courtesy of Preqin‘s Global Hedge Fund Report:
Their core strategies were probably equity strategies.
Of the top 20 performers, 75 per cent used equity strategies. Of the top 10, equity strategy funds had a higher median return (59 per cent) than any other type.
They have most likely been active for more than five years.
57 per cent of all top performers had been active at least since 2009.
There’s a good chance their manager was based in North America.
13 per cent of top performing managers were based in New York, 4 per cent in Canada, and 3 in California.
They tended to be less risky.
They invested heavily in India.
Last year’s No. 1 performer was Arcstone Capital’s Passage to India Opportunity Fund, a long-bias, value-oriented fund that saw a 225 per cent net return.
Two other top performers were Alchemy India Long-Term Fund (up 60 per cent) and ArthVeda Alpha India L50 (up 39 per cent).
Though this may have seemed like an obscure bet at the beginning of 2014, India’s Sensex, the benchmark index of the Bombay Stock Exchange, actually rose about 30 per cent throughout the year.