Hedge funds ended 2012 on a positive note and posted substantial gains across all regional and strategic mandates in December. The Eurekahedge Hedge Fund Index was up 1.46%1 during the month, bringing the 2012 yearly return to 6.19%. Comparatively the MSCI World Index gained 2.22%2during the month and 13.55% in 2012. The capital-weighted Mizuho-Eurekahedge Top100 Index, which tracks the assets and performance of the largest 100 hedge funds, gained 6.20% in 2012.
It was a year coupled with risks and rewards in 2012 with high levels of activity surrounding the financial markets: more money printing, sovereign bailouts, the Spanish banking crisis, the potential Greek exit from the euro and almost half of the major countries had presidential elections taking place - including France, China, Korea and the US.
As with most of 2012, market trends in December were influenced by government policy decisions, particularly the US budget negotiations. The month witnessed some volatility on a weekly basis and was marked by trend reversals – the markets rallied mid-month amid optimism over an agreement on averting the US fiscal cliff, but declined after that. The S&P 500 index posted a strong final-day rally amid signs of US Congress getting close to an agreement.
December 2012 and November 2012 returns across regions
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1Based on 73.80% of funds which have reported December 2012 returns as at 18 January 2013
2MSCI AC World Index All Core (Local Currency)