If not in 2020, when?
Hedge funds had their best year in over a decade in 2020, but still lagged broader measures of stock-market performance, according to a report published Tuesday.
The Eurekahedge Hedge Fund Index (link) gained 11.77% for the full year, the industry group said. That compares to an 18.4% return for the S&P 500 and a 44.92% gain for the technology-oriented Nasdaq Composite index. Eurekahedge's North American index also fell short, gaining 14.82%.
Hedge funds using a tail risk strategy did best in 2020, returning 32.23%, followed by long volatility strategies, which rose 23.57%.
Read next:This chart shows investors' tectonic shift away from stock pickers (link)
As many market-watchers have noted, if ever there was a moment for active managers to shine, it should have been 2020 (link), with its once-in-a-generation market upheaval. In fact, 2020 did mark something of an improvement for hedge funds: in 2019, they returned a woeful 8.9% (link), compared to the S&P 500's 28.9%.
And some active managers made 2020 work for them (link). The Ark Innovation ETF(ARKK), the flagship exchange-traded fund run by Cathie Wood's company, gained 152.82% last year.
But the winning streak for passively-managed strategies compared to expensive active managers has been intact for some time. 2020 was the best year for hedge funds since 2009, when they returned 21.22%, Eurekahedge said. That year, the S&P 500 gained 26.46%.
Read next: The years-long shift from active to passive is still going, and Dan Draper has a front-row seat for it all (link)
-Andrea Riquier; 415-439-6400; AskNewswires@dowjones.com
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01-12-21 0912ETCopyright (c) 2021 Dow Jones & Company, Inc.