Early estimates from the Credit Suisse/Tremont Hedge Fund Index report a slight positive finish to 2009, with the index up 0.39% in December 2009 based on 62% of assets reporting.

Top performing sectors included event-driven, long/short equity, emerging markets and convertible arbitrage. Event-driven managers capitalised on their credit books as high yield and leveraged loan markets spreads tightened. Managers also seized opportunities in select idiosyncratic distressed situations.

Long/short equity and emerging markets experienced positive performance in December with performance largely propelled by rallies in Japanese and certain European equity markets. Following early gains, many managers took risk off the books as markets slowed down in the second half of the month.

A correction in gold and other precious metals resulted in losses in the global macro and managed futures sectors. Many macro managers were also adversely affected by the reversal in the US dollar.

Quantitative funds experienced some of the steepest losses due to high levels of risk. Discretionary managers had better performance as many pared back risk towards the end of 2009.

Convertible arbitrage experienced its twelfth consecutive month of gains to end of 2009. It was the best performer among hedge fund strategies as the US convertible bond market had a record return of 49% in 2009.

New issuance was light aside from a $3.5 billion issue from Citibank.

Strategy estimates (%)