The Greenwich Composite Investable Hedge Fund Index has again outperformed its peers.

The Greenwich Composite Investable Hedge Fund Index has again outperformed its peers, posting higher returns than competing investable indices every year since its inception in 2003, according to hedge fund index provider Greenwich Alternative Investments.

From January 2003 to December 2006, the Greenwich Investable Hedge Fund Index produced an annualised return of 10.7 per cent versus 7.3 per cent, 6.9 per cent and 5.6 per cent as reported for the same period by the investable index providers of CSFB, HFR and MSCI respectively.

For the fourth year running, the Greenwich Investable Index has also achieved the lowest tracking difference to its broad benchmark, the Greenwich Global Hedge Fund Index.

The Greenwich Investable Hedge Fund Index reported an annualised return of 10.7 per cent versus 11.7 per cent for the Greenwich Global Hedge Fund Index, a difference of one per cent.

By comparison, over the same period, the annualised tracking error of other investable indices was claimed as significantly higher with CSFB, MSCI and HFR reporting 4.3 per cent, 4.8 per cent and 5.7 per cent respectively.

Margaret Gilbert, managing director at Greenwich Alternative Investments, said: “The Greenwich Composite Investable Hedge Fund is the only investable hedge fund index that has closely tracked its benchmark and successfully delivered the beta of the hedge fund universe".

Most Greenwich indexes had got off to a good start in January 2007.

Meanwhile, over at MSCI, the fourth quarter was a good time to be in emerging markets and a bad time to be in Japan, according to MSCI Barra’s fourth-quarter MSCI Hedge Fund Indices Global Summary.

Indeed, it was thus in 2006 as a whole.

MSCI’s emerging markets and global markets indices did well in Q4, returning 7.9 per cent and 7.7 per cent respectively, bringing both strategies to 17 per cent for the year.

Japan, on the other hand, was the only MSCI hedge fund index in the red for the year, as its anaemic 0.5 per cent performance in the fourth quarter was not enough to drag it into positive territory. It finished the year down 4.7 per cent.

The overall MSCI Hedge Fund Composite Index had a strong quarter, returning 5 per cent, but its full-year return of 11.3 per cent was well behind the MSCI World Equity Index, which returned 20.1 per cent.

Money continued to pour into hedge funds, as funds covered by the index added some $4.1 billion in the fourth quarter. Those who invested in smaller funds were rewarded, as funds with between $15 million and $100 million in assets outperformed the MSCI Core Fund Index 5.2 per cent against 4.7 per cent.