NEW YORK (HedgeWorld.com)–Hedge funds made their best returns in recent months on the S&P Hedge Fund Index, which ticked up 1.45% in November.
Returns were led by directional/tactical and event-driven managers, which made gains on short U.S. dollar positions and long-equity index holdings as the dollar fell and equities inched forward after the U.S. presidential election, according to Standard & Poor's.
Directional and tactical managers, such as long/short equity, macro and managed futures were up 3.29% on the S&P Directional/Tactical Index. According to S&P's analysis, the materials sector was profitable as demand from China and Asia overall continues to grow, and as volatility, churned up by the health-care sector due to Merck's problems with its arthritis drug Vioxx, aided hedge fund performance.
Volatility was still mostly in neutral, though, last month, with U.S. long/short equity managers gaining only 3.27% in comparison to the S&P 500 Index's November gain of 3.86%. Managed futures managers also performed well because of market dynamics.
"Volatility again entered the energy markets in November as most futures contracts had significant retracements off their highs due to reports of increased oil production," said Justin Dew, senior hedge fund specialist at Standard & Poor's, in a statement.
