- Advertisement -
- Advertisement -

Related

Hedge Funds beat traditionasl in 2016 – risk adjusted

Latest Report

- Advertisement -

Stockholm (HedgeNordic) – According to AIMA and data provider Preqin, Hedge funds, despite the subconsciously felt disappointment, actually outperformed traditional assists such as equities and bonds on a risk-adjusted basis in 2016.

Hedge funds’ risk-adjusted return, as measured by the Sharpe ratio, was 1.45 for the year, ahead of the S&P 500 (1.1), MSCI World (0.68) and Barclays Global Aggregate (0.20) indices, according to AIMA and Preqin.

The analysis, based on a database of more than 3,000 funds, found that hedge funds also outperformed stocks and bonds on a risk-adjusted basis over three years and five years. Risk-adjusted outperformance is highly valued by institutional investors such as pension funds since it reflects volatility as well as net returns.

On an absolute basis, hedge funds returned 7.4 per cent last year, according to the Preqin All-Strategies Hedge Fund index. The Nordic Hedge Index Composite (NHX) by comparison shows an indicative return of 3.5% for 2016, with an 88% conviction.

At the same time, AIMA and Preqin estimated that the net gain in the value of hedge fund assets in 2016 represented USD120 billion. That would be the value of investment profits net of all fees, were investors to withdraw their investments and crystallise those gains.

AIMAs Jack Inglis told Hedgeweek “We already know from the various indices such as Preqin that have reported their flash numbers this month that 2016 was one of the better years for hedge funds since the financial crisis. Even though the headline numbers may not have met all investors’ expectations, our analysis highlights the importance of explaining various strategies and timeframes for yielding returns to clients. Significantly, on average hedge funds outperform on the key metric of risk-adjusted returns over one year, three years and five years.”

Amy Bensted, head of hedge fund products, Preqin, added: “2016 could be characterised as a year of a series of unpredicted events. As markets responded to the unexpected events of 2016 hedge funds were able to show their worth and generate their best returns for three years. Investors, however, are looking for hedge funds to produce more than high returns; as this study shows hedge funds have delivered solid risk-adjusted returns over the short and longer terms, a facet of hedge funds that is highly prized among the institutional investors that Preqin works with.”

Picture: (c) STILLFX—shutterstock.com

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Kamran Ghalitschi
Kamran Ghalitschi
Kamran has been working in the financial industry since 1994 and has specialized on client relations and marketing. Having worked with retail clients in asset management and brokerage the first ten years of his career for major European banks, he joined a CTA / Managed Futures fund with 1,5 Billion USD under management where he was responsible for sales, client relations and operations in the BeNeLux and Nordic countries. Kamran joined a multi-family office managing their own fund of hedgefunds with 400 million USD AuM in 2009. Kamran has worked and lived in Vienna, Frankfurt, Amsterdam and Stockholm. Born in 1974, Kamran today again lives in Vienna, Austria.

Latest Articles

Fresh Talent, New Funds: ALCUR Expands Reach in Retail Segment

After a wave of portfolio manager hires earlier this year, stock-picking fund boutique ALCUR Fonder is preparing to launch several new funds aimed at...

Quirky Questions for Kathryn Kaminski (AlphaSimplex)

Not every hedge fund conversation needs to revolve around performance charts or trade execution. In HedgeNordic’s Quirky Questions series, we look beyond the strategies to the...

Active Decisions in Passive Wrappers: Othania on ETF Innovation

Founded in early 2016 by brothers Vincent Dilling-Larsen and Christian Mørup-Larsen, Danish fund boutique Othania built its foundation on a proprietary risk model, “Tiger,”...

Rettig Appoints Crescit Manager to Oversee Hedge Fund Strategies

Simon Borgefors has joined Finnish family-owned investment company Rettig as Investment Director for hedge fund strategies in Stockholm, leaving Swedish hedge fund boutique Crescit...

€5m Ticket to Nordic High Yield From German Family Office

A German family office plans an initial €5 million commitment to a UCITS‑compliant Nordic high‑yield fund, with capacity to scale over time. According to...

From Beef to Bitcoin: August’s Wild CTA Ride

In August 2025, the CTA sub-index of the Nordic Hedge Index edged lower after two positive months, reflecting mixed performance among managers. Strong gains...

Allocator Interviews

In-Depth: High Yield

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.