Key Takeaways
- • HSBC's year-end 2011 hedge fund performance review identified 15 top-performing funds that delivered positive returns despite the industry suffering its second-worst year on record, with record fund closures.
- • III Relative Value Credit Strategies Fund Ltd (fixed-income arbitrage strategy, $160 million AUM) returned 10.14% as of December 23, 2011, under manager Garth Friesen at III Offshore Advisors.
- • JP Morgan Portfolio Strategies Europe Dynamic L/S Fund (equity long/short, Europe-focused, $384 million AUM) delivered 10.2% returns with managers Jonathan Ingram, John Baker, and Anis Lahlou-Abid at J.P. Morgan Asset Management.
- • Ennismore European Smaller Companies (equity long/short strategy, $273 million AUM) posted 10.21% returns under manager Geoff Oldfield at Ennismore Fund Management, demonstrating strong small-cap European exposure.
- • The top-performing funds employed diverse strategies including fixed-income arbitrage, European equity long/short positioning, and absolute return targeting, indicating that strategy diversification and geographic focus provided downside protection in a difficult market environment.
Summary
The 2011 hedge fund industry faced significant headwinds, with the Eurekahedge Hedge Fund Index reporting the second-worst performance year in its history and fund closures reaching record levels. However, HSBC's year-end Hedge Weekly performance review identified a cohort of 15 funds that successfully navigated the challenging market environment and delivered positive returns.
Among the top performers was III Relative Value Credit Strategies Fund Ltd, managed by Garth Friesen at III Offshore Advisors, which achieved a 10.14% return as of December 23, 2011. Operating with $160 million in assets under management, the fund employed a fixed-income arbitrage strategy that proved resilient during the credit market volatility of 2011. JP Morgan Portfolio Strategies Europe Dynamic L/S Fund generated a 10.2% return with $384 million in AUM, benefiting from its long/short equity positioning focused on European equities and managed by Jonathan Ingram, John Baker, and Anis Lahlou-Abid at J.P. Morgan Asset Management.
Ennismore European Smaller Companies also demonstrated strong performance with a 10.21% return as of December 15, 2011, with $273 million under management. Managed by Geoff Oldfield at Ennismore Fund Management, the fund's equity long/short strategy targeting smaller-capitalization European companies positioned it to capture alpha in a more specialized market segment.
The dominance of these 15 funds underscores how strategic positioning, whether through credit strategies, geographic specialization, or market-cap focus, provided meaningful protection against the broader industry downturn. While the hedge fund industry contracted significantly in 2011, managers who maintained disciplined risk management and differentiated investment approaches were able to generate positive returns for their investors.
Among the top performers was III Relative Value Credit Strategies Fund Ltd, managed by Garth Friesen at III Offshore Advisors, which achieved a 10.14% return as of December 23, 2011. Operating with $160 million in assets under management, the fund employed a fixed-income arbitrage strategy that proved resilient during the credit market volatility of 2011. JP Morgan Portfolio Strategies Europe Dynamic L/S Fund generated a 10.2% return with $384 million in AUM, benefiting from its long/short equity positioning focused on European equities and managed by Jonathan Ingram, John Baker, and Anis Lahlou-Abid at J.P. Morgan Asset Management.
Ennismore European Smaller Companies also demonstrated strong performance with a 10.21% return as of December 15, 2011, with $273 million under management. Managed by Geoff Oldfield at Ennismore Fund Management, the fund's equity long/short strategy targeting smaller-capitalization European companies positioned it to capture alpha in a more specialized market segment.
The dominance of these 15 funds underscores how strategic positioning, whether through credit strategies, geographic specialization, or market-cap focus, provided meaningful protection against the broader industry downturn. While the hedge fund industry contracted significantly in 2011, managers who maintained disciplined risk management and differentiated investment approaches were able to generate positive returns for their investors.
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