Equity strength sees FOHFs finish year in style

Disappointing 2010 for funds of hedge funds lifted by 3.5% return in the fourth quarter as funds of long/short equity funds finally perform

Funds of hedge funds (FOHFs) finished 2010 strongly, returning about 3.5% in the fourth quarter to give a full year return of 5% according to HFN’s database. Until September, returns had been disappointing, mainly because long/ short equity hedge funds were struggling to make money. However, directional and flexible beta equity hedge funds had a very strong fourth quarter and for many funds of long/short equity hedge funds, September 2010 proved to be the best month in the past five years. This was largely attributable to the unseasonal strength in the underlying equity market. ...