Michelle Celarier, editor, AR: Absolute Return + Alpha
The financial collapse of 2008 laid the groundwork for huge gains for US hedge funds in 2009, with performance rising sharply in most strategies. At the same time, the hangover from the crisis produced a record number of fund closures, including some big names, while keeping the dollars amassed by new fund launches at their lowest level in years. The size of the hedge fund industry likewise remains far below its peak in the summer of 2008.
First, the good news. The Absolute Return Composite rose a mean 21.16% for the year. One of the hardest hit strategies of 2008 - convertible and equity arbitrage - posted the biggest average gain of 49.71%, while the distressed index proved to be another of last year's winners, rising an average 31.61%.
But the big numbers didn't translate into a record year for asset growth,...