Covid crisis opens chasm between hedge fund winners and losers

Covid crisis opens chasm between hedge fund winners and losers

Difference in performance of top and bottom managers hits widest level since 2009

The Covid-19 crisis has created the widest gulf in performance between top and bottom hedge funds in more than a decade, with sharp gains generated by several managers helping to revive interest in the industry.

Ructions that rippled through global markets in early 2020, followed by the enormous rebound rally opened opportunities not seen since the 2008-09 financial crisis. But that same wave of volatility also wrongfooted a clutch of the sector’s biggest names.

The top 10 per cent of hedge funds recorded average returns of 49 per cent over the 12 months to the end of November, the best performance since 2009, according to data group HFR. At the same time, however, the gap between the top and bottom deciles widened to 68.9 percentage points, marking the biggest difference in 11 years.

“Plenty of hedge funds nailed 2020,” said Andrew Beer, managing member at US investment firm Dynamic Beta Investments. Many “had their best year since the great financial crisis”.