Sally Ling in London from Wealth Briefing

Hedge funds rose in December as equities posted strong gains on the year’s final trading day in anticipation of the passage of legislation to avert the US fiscal cliff. The HFRI Fund Weighted Composite Index gained 1.3 per cent for the month, bringing full year performance to 6.2 per cent.

According to Chicago-based Hedge Fund Research, event-driven strategies were the top performer of the month, with the HFRI Event Driven Index gaining 1.63 per cent in December, bringing performance for the full year to 8.5 per cent. Fixed income-based relative value arbitrage led hedge fund strategy performance for 2012, with the HFRI Relative Value Index gaining 10.0 per cent, including a gain of 0.7 per cent in December.

HFR reports that RVA strategies, which include exposure to various arbitrage and credit multi-strategy funds, have continued to attract investor capital in recent quarters with steady, consistent performance. The RVA Index has posted gains in 41 out of the 48 months since December 2008. RVA also led hedge fund strategy performance in 2011 and 2009, trailing only event driven in 2010.

“The hedge fund industry has evolved and advanced for four years since the financial crisis … [it] is now larger, more sophisticated, more accessible, more global, more diversified, more transparent, more efficient and more capable of meeting the requirements of institutional and individual investors in 2013,” Kenneth Heinz, president of HFR, said in a statement.

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