Hedge funds set for best returns in ten years: report

Credit Suisse Tremont Index has just released a new research report, "Q3 2009 Hedge Fund Update: On the Road to Recovery" that reviews third quarter hedge fund performance with a focus on the ongoing recovery of the overall industry. The report explores the year-to-date performance of hedge funds as represented by the Credit Suisse/Tremont Hedge Fund Index, which are currently on track to post their best annual returns in 10 years. Through September 30, 2009, the Credit Suisse/Tremont Hedge Fund Index is up 15% with 83% of all funds posting positive performance.

Some key findings from the report include:

• 26% of all hedge funds have “fully recovered” their losses from 2008, i.e., they have regained all losses to meet or surpass previous peak performance levels.
• Overall, the industry experienced net outflows of $4.8 billion in the third quarter.
• Sizeable redemptions occurred in the Event Driven sector, resulting in a net outflow of $7.4 billion for the quarter.
• The Long/Short Equity sector experienced the most significant increase in new capital, resulting in a net positive flow of $3.0 billion for the quarter.
• Including performance gains, total hedge fund AuM is estimated at $1.4 trillion as of September 30, 2009. This is up from an estimated $1.3 trillion as of June 30, 2009.