Average Investor Outperforms Hedge Funds In 2013

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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:


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