December last year was volatile but hedge funds managed to log gains, with commodity trading funds, technology and shareholder activist strategies leading the way, according to Chicago-headquartered Hedge Fund Research.

December last year was volatile but hedge funds managed to log gains, with commodity trading funds, technology and shareholder activist strategies leading the way, according to Chicago-headquartered Hedge Fund Research.

The firm’s HFRI Fund Weighted Composite Index® gained  0.3 per cent in December, despite a sharp decline in crude oil, Russian- and euro-centric macro/currency uncertainty and equity volatility across both emerging and developed markets.

The HFRI Fund Weighted Composite Index advanced by 3.6 per cent for 2014, below the long-term average hedge fund industry performance of 10.7 per cent, as hedge fund managers maintained conservative exposures with equity markets near record highs, HFR said in a statement yesterday.

Hedge fund strategy gains were led by macro strategies, with the HFRI Macro (Total) Index up 1.0 per cent for the month and 6.4 per cent for 2014; macro funds had posted three consecutive calendar year declines.

Macro strategies were led by quantitative, systematic diversified CTA strategies, with the HFRI Macro: Systematic Diversified/CTA Index gaining 1.5 per cent in December to complete a gain of 11.2 per cent for 2014, leading all hedge fund strategies.

TAs posted strong gains in the second half of the year, benefitting from trending behavior in oil, energy commodities and currencies, climbing +11.0 percent in 2H14, while the HFRI Macro (Total) Index was up +5.3 percent in 2H14. The HFRI Macro: Currency Index gained +1.8 percent in December and +4.2 percent for 2014; the Index was slightly negative for 1H14 but advanced +5.4 percent in 2H.

Fixed income-based relative value arbitrage strategies logged a small decline in December to conclude its sixth consecutive year of positive performance. The HFRI Relative Value Arbitrage Index declined 0.02 per cent in December, although it gained 4.5 per cent for 2014.

Event-driven strategies also posted a narrow decline for December, with gains from activist sub-strategies offset by declines in distressed exposures. The HFRI Event Driven Index declined 0.08 per cent for December to conclude 2014 with a gain of 1.1 per cent, the lowest performance since the index declined 3.3 per cent in 2011. The HFRI Activist Index climbed 2.5 per cent in December, recovering from sharp declines in September and October to post a gain of 4.8 per cent for 2014, leading all ED sub-strategies. Offsetting these, the HFRI Distressed Index fell by 1.4 per cent in December as credit and liquidity weakened, contributing to a decline of 1.1 per cent for 2014, the worst performance since the index declined -1.8 per cent in 2011.