The world's hedge fund sector has not had it easy in recent years, particularly because conventional, long-only equity investing has ridden higher on the back of rising stock markets, helped by central bank quantitative easing. But new figures show that there is plenty of life in the sector.

Hedge funds advanced in December to conclude 2019 with the strongest performance year since 2009, when the markets were recovering from the financial market crash, industry figures showed yesterday.

The HFRI Fund Weighted Composite Index®, issued by Chicago-based firm Hedge Fund Research, rose by 1.8 per cent in December from a month before, increasing 2019 performance to 10.4 per cent, the strongest calendar year result since the HFRI FWC surged by 20.0 per cent in 2009.

The HFRI 500 Fund Weighted Composite Index, an investible index of 500 leading hedge funds, rose by 1.4 per cent in December, while the HFRI-I Liquid Alternative UCITS Index advanced by 0.93 per cent, led by a 1.5 per cent return in the HFRI-I Liquid Alternative UCITS Equity Hedge Index for the month.

Performance in December and throughout 2019 was led by Equity Hedge strategies, as optimism over trade and the US economy drove US equities to lead broad-based global gains. The HFRI Equity Hedge (Total) Index gained by 2.7 per cent for the month, bringing 2019 performance to 13.9 per cent, the strongest year for the category since 2013. Healthcare and technology exposures led EH sub-strategies, as the HFRI EH: Healthcare Index rose by 7.0 per cent in December to bring FY 2019 performance to 23.4 per cent.

Event-driven and relative value arbitrage strategies also gained in December, as the M&A/IPO environment remained robust, interest rates remained low and credit spreads remained tight. 

The HFRI Event-Driven (Total) Index advanced by 1.7 per cent for the month to bring the full-year 2019 performance to 7.4 per cent.