Credit Suisse Index Co., Inc., today released its latest industry research, Analyzing Past Market Turmoil and Outcome for Hedge Funds,which has found that hedge funds are able to recover quickly after market turmoil. The most recent research examines the effects of five crises on hedge funds and world financial markets, finding that hedge funds, if affected, were able to return to positive returns quicker than global equity or debt markets.
Hedge funds, as exhibited by the Credit Suisse/Tremont Hedge Fund Index ("HEDG"), have shown the ability to recover quickly after market turmoil in the past, exhibiting trends of correlation in subsequent bull market runs and decorrelation at market downturns surrounding the event, according to the Credit Suisse Index Co., Inc. Even during the worst downturns, hedge funds were able to resume to positive returns quicker than global equity or debt markets.
Some of the findings in Analyzing Past Market Turmoil and Outcome for Hedge Funds include the following:
- Hedge funds, as represented by HEDG have tended to remain less volatile and have retained some positive performance throughout most market crises.
- In mid-to-late 1997, hedge funds exhibited decorrelation subsequent to the peak of the Asian Crisis, and HEDG returned 23.62% from July 1997 through June 1998.
- During the Russian Debt/ Long Term Capital Management crisis, many sectors suffered including Event Driven and Emerging Markets, while Equity Market Neutral and Long/Short Equity quickly rebounded, exhibiting that diversification of hedge fund strategies provided some protection.
- During the dot com bubble burst in mid 2000, hedge funds generally maintained flat returns in the face of drastic drops, however trends of strong decorrelation were exhibited as hedge funds quickly adapted to the crisis.
- After the 9/11 World Trade Center attacks, hedge funds maintained steady returns and hedged against the crisis.
- In the face of the credit crisis in early 2005, hedge funds again retained positive performance amidst declining government bonds, exhibiting again that even during the worst downturns, hedge funds are able to resume positive returns quicker than global equity or debt markets.
Credit Suisse Index Co., Inc., industry commentaries and publications are available on the Research and News section of our website, www.hedgeindex.com.
Information
Oliver Schupp, Credit Suisse, telephone 212 538 8179, oliver.schupp@credit-suisse.com
Meg Bode, Bode Associates, telephone 516 869 6610, meg@bodeassociates.com
Suzanne Fleming, Credit Suisse, telephone 212 325 7396, suzanne.fleming@credit-suisse.com
Credit Suisse
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