Research on the Performance of Hedge Funds with Different Strategies in the 2008 Financial Crisis

Abstract

The financial crisis of 2008 affected hedge funds of all types and with different strategies to varying degrees. In this article, I will examine the performance of five strategies during the crisis and the reasons for this. In 2008, managed futures strategies returned 19.31% because the futures market mainly deals with commodities, which are highly volatile and trendy, and managed futures strategies, which are mainly trend-based, are more likely to achieve excellent returns in this market. The macro strategy returned 3.34% because the strategy executors focused on the overall economic fundamentals and potential crises. Because the macro strategy has a global coverage of investments and multiple species, there are more options to hedge against risks when they arise. The long/short equity strategy returned -19.26%. The long/short equity strategy is predominantly long, with significant losses on long trades outweighing gains on short positions resulting in an overall negative return. The event-driven strategy returned -20.30%. Major corporate events often suffer from various resistance to proceed correctly in the case of a financial crisis. I hope my research will help investors allocate their investments appropriately according to the characteristics of different strategy funds.