Michelle Celarier, editor, Absolute Return
At the beginning of 2008, the Absolute Return Billion Dollar Club tracked 262 American hedge funds with more than $1 billion, for a total of $1.6 trillion – a five-fold increase in five years. By the start of 2009, the number had slid to 218 firms, managing $1.13 billion, back to where it was in July of 2006.
The collapse of the financial industry in 2008 that started on Wall Street has shaken hedge funds to their core. As the world staggered under the realisation that these are the most difficult economic times since the Great Depression, hedge funds managed to outperform the major indices. Alternative investments are designed to profit when mainstream investments cannot, and hedge funds proved their mettle in this regard. The US Absolute Return US Equity Index mean was down 20%, compared with 38% for the S&P 500. The...