The average hedge fund underperformed the wider stock market in 2020 but saw less volatility while stock-picking funds got a lift from technology and stay-at-home shares in a year beset by a pandemic and uncertainty around the U.S. election.
Investors said the performance was still solid given that many of the hedge funds in their portfolios had produced double-digit returns or otherwise preserved assets during the March rut when fears about coronavirus wiped US$5 trillion from U.S. stocks. Many hedge funds were heavily invested in stocks that benefited from consumers and workers staying at home during the pandemic, including Zoom Video Communications Inc and Amazon.com Inc.
Hedge fund peers that bet on mergers and acquisitions made 5.4per cent over the same period while strategies that invest based on macroeconomic trends made 1.4per cent, the data showed.