Average Investor Outperforms Hedge Funds In 2013

The three major indices have outshone hedge funds during 2013. The DJIA closed 2013 with a gain of 26.5%, the S&P 500 (INDEXSP:.INX) was up 29.6% and the Nasdaq rose 38.2%.

As computed up to November, the HFRI Equity Hedge Index was up a piffling 13%. Bread and butter mutual funds did far better than the fancier bells and whistles hedge funds, says this article. Not only did investors do better by simply buying and holding, they also saved on the huge fees hedge funds usually charge.

HSBC’s 52nd Hedge Weekly report issued by the HSBC Alternative Investment Group provides useful insight into how various hedge funds performed in 2013 by strategy.

Summarized below are the returns achieved in descending order.

Fund TypeFund Category2013 YTD Returns %
Equity-EnergyEquity Long/Short28.92
Equity-Pharma-BiotechEquity Long/Short25.44
Equity-HealthcareEquity Long/Short23.88
Equity-DiversifiedEvent Driven23.78
Multi-StrategyEvent Driven22.67
Equity-Mid-Small CapEquity Long/Short18.28
Equity-DiversifiedEquity Long/Short16.65
Equity-FinancialEquity Long/Short16.28
Equity-Real EstateEquity Long/Short13.11
Equity-CommodityEquity Long/Short12.46
Equity DiversifiedMarket Neutral10.80
Credit Long/ShortCredit Long/Short9.84
Event DrivenFund of Funds9.49
DiscretionaryMarket Neutral9.36
MacroFund of Funds8.31
Long/ShortFund of Funds7.67
Convertible ArbitrageConvertible Arbitrage7.45
SystematicMarket Neutral7.11
Multi-StrategyFund of Funds6.97
Equity-TechnologyEquity Long/Short6.00
Statistical ArbitrageMarket Neutral5.98
Multi-StrategyMarket Neutral5.36
ArbitrageFund of Funds4.85
CommodityManaged Futures4.15
Equity-UtilityEquity Long/Short3.95
Fixed Income ArbitrageFixed Income Arbitrage3.85
SystematicManaged Futures2.36
ArbitrageVolatility Arbitrage-1.33
Fixed IncomeMacro-4.88
Equity-DiversifiedLong Only-8.97
TradingFund of Funds-11.29
CurrencyManaged Futures-16.28

Here are the top five performing hedge funds as per HSBC’s report:


And here are the worst five performers during 2013: