With the Covid-19 pandemic looming large over global economies for a second year, and markets and asset classes enduring sporadic bouts of volatility, hedge funds once again made a strong case for their inclusion in investors’ broader portfolios during 2021.
The industry generated double-digit gains averaging more than 10 per cent last year, falling just short of 2020’s near-12 per cent rise, but nevertheless recording its third-best performance since 2009, when an assortment of hedge fund strategies scored stellar returns amid the turmoil of the Global Financial Crisis.
Perhaps more importantly, though, 2021’s steady showing appears to have consolidated hedge funds’ recent renaissance in the eyes of investors following a patchy decade which saw many allocators retreat from the sector: industry assets swelled towards record volumes of some USD4 trillion during the past 12 months.
2022 looks set to be another year ripe with opportunity and fraught with risk. As governments and central banks aim to steer economies through a nascent recovery from the upheaval of the pandemic, the geopolitical backdrop and investment environment looks more fractured than ever. Renewed challenges surrounding inflation, interest rates, and stock market gyrations sit next to the booming expansion of cryptocurrencies and digital assets, the post- Covid rebound in M&A activity, soaring commodity prices, and the growing urgency of the climate emergency.
With yield-hungry investors continuing to reevaluate their traditional 60/40 allocations, it’s all shaping up to be another busy – not to mention unpredictable – year for hedge funds, regardless of investment strategy.
Hedgeweek’s annual Global Outlook once again takes an in-depth look at the range of issues impacting equities, credit, macro and more, with both established, brand-name hedge fund managers and smaller start-up names across regions offering candid and often-contrarian perspectives on the key investment themes and risks dominating their respective markets over next 12 months.
The report also takes the temperature of the hedge fund investor community, and considers how ESG, technology and other emerging new trends are continuing to influence and disrupt this most pioneering and forward-thinking of industries. We hope you enjoy it.
All of us at Hedgeweek would like to extend our gratitude to all those who took time out of their busy schedules to offer their valuable insights in this year’s report.
I wish everyone a safe and successful 2022.
Hugh Leask
Editor, Hedgeweek
