Hedge funds outperformed many major global equity indices for the year while maintaining considerably less volatility: the Credit Suisse/Tremont hedge fund index for 2007 to 30 November finished with estimated annual returns of 12.1 per cent, according to president Oliver Schupp. “Hedge funds experienced a challenging year due to certain market events but finished by outperforming many major global equity indices while maintaining considerably less volatility.” Hedge fund managers responded positively to four specific factors which influenced financial markets in each of the four quarters of 2007: a major sell-off in China in late February; the sub-prime meltdown; a statistical arbitrage sell-off; and November’s equity sell-off.