Long/Short Strategies Dominate Top 100 Hedge Funds

Dec 1 2014 | 12:22pm ET

Long/short strategies represented seven of the top 10 hedge funds in the period from October 2013 to September 2014, according to new data from Preqin.

Long/short strategies also accounted for 45 of the top 100 hedge funds (69%), as ranked by the data provider, which looked at funds within its 10,000+ fund database that had returned results for the monitored period and had at least $100 million in assets under management. The predominance of long/short strategies is not surprising, given that long/short strategies represent 67% of all hedge funds in the sample.

Perhaps more interestingly, CTAs, which account for only 8% of all funds, accounted for 19% of the top 100 while funds of hedge funds, which account for 17% of all funds, represented only 3% of the top 100.

Region-wise, North America accounted for 45% of the top 100 hedge funds. And with the exception of two Canadian managers—Front Street Capital and RIMA Senvest Management—all those top performers were based in the U.S.

Europe accounted for 35% of the top performers and Asia Pacific for 11%. But Africa, Latin America and the Middle East, although home to far fewer funds, also managed to place in the top 100, accounting for 4%, 3% and 2%, respectively, of the best performers.

Preqin also noted that smaller funds have “proven themselves more nimble and have outperformed their larger counterparts.”  A full 52% of  the aggregate assets under management of the top 100 funds was  contributed by funds ranked in the fourth quartile of the list.

As for age, the oldest fund found in the top 100 listing was Millburn Ridgefield Corporation's Millburn Diversified Program, founded in February 1977. The youngest was the one-year-old Blue Jay Health Sciences Master Fund, the maiden offering from Blue Jay  Capital Management.

And in a dramatic illustration of just how often outsized returns come hand in hand with higher volatility, Preqin notes that only three funds from last year's top 100 list returned in 2014 while 10 funds listed in 2012 are back on the list this year.

Here are the top 10 hedge funds for October 2013 to September 2014 as ranked by Preqin (next page).

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