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 Type | Fund Category | 2013 YTD Returns % |
| Equity-Energy | Equity Long/Short | 28.92 |
| Equity-Pharma-Biotech | Equity Long/Short | 25.44 |
| Equity-Healthcare | Equity Long/Short | 23.88 |
| Equity-Diversified | Event Driven | 23.78 |
| Multi-Strategy | Event Driven | 22.67 |
| Credit | Multi-Strategy | 18.38 |
| Equity-Mid-Small Cap | Equity Long/Short | 18.28 |
| Equity-Diversified | Equity Long/Short | 16.65 |
| Equity-Financial | Equity Long/Short | 16.28 |
| Equity-Real Estate | Equity Long/Short | 13.11 |
| Distressed | Distressed | 13.10 |
| Equity-Commodity | Equity Long/Short | 12.46 |
| Equity Diversified | Market Neutral | 10.80 |
| Credit Long/Short | Credit Long/Short | 9.84 |
| Event Driven | Fund of Funds | 9.49 |
| Discretionary | Market Neutral | 9.36 |
| Diversified | Multi-Strategy | 9.33 |
| Merger-Arbitrage | Merger-Arbitrage | 8.64 |
| Macro | Fund of Funds | 8.31 |
| Long/Short | Fund of Funds | 7.67 |
| Convertible Arbitrage | Convertible Arbitrage | 7.45 |
| Diversified | Macro | 7.27 |
| Systematic | Market Neutral | 7.11 |
| Multi-Strategy | Fund of Funds | 6.97 |
| Equity-Technology | Equity Long/Short | 6.00 |
| Statistical Arbitrage | Market Neutral | 5.98 |
| Multi-Strategy | Market Neutral | 5.36 |
| Arbitrage | Fund of Funds | 4.85 |
| Commodity | Managed Futures | 4.15 |
| Equity-Utility | Equity Long/Short | 3.95 |
| Fixed Income Arbitrage | Fixed Income Arbitrage | 3.85 |
| Commodity | Macro | 3.45 |
| Systematic | Managed Futures | 2.36 |
| Currency | Macro | -1.11 |
| Arbitrage | Volatility Arbitrage | -1.33 |
| Fixed Income | Macro | -4.88 |
| Commodity-Systematic | Macro | -8.63 |
| Equity-Diversified | Long Only | -8.97 |
| Systematic | Macro | -10.71 |
| Trading | Fund of Funds | -11.29 |
| Currency | Managed 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:
