"Alternative Alternatives" investment funds start 2011 slightly negative, returning -0.55% in January after double digit returns in 2010
Opalesque Ltd., a leading provider of online information services to the alternative investment industry, today announced the preliminary results of the Opalesque A SQUARE ('alternative-alternatives') indices covering the performance of niche alternative investment funds.
- (1888PressRelease) February 25, 2011 - The indices are calculated based on the net performance of 591 single- and multi-manager funds currently listed in 22 categories in the Opalesque Solutions A SQUARE Fund Database.
The Opalesque A SQUARE Index declined an estimated* 0.55% in January, bringing the 12-month performance to +10.39%. The A SQUARE Funds of Funds Index posted an estimated loss of 0.37% in January, leading to a 12-month performance of 4.43%.
Over the last 12 months, performance of the A SQUARE Index ranged between a gain of 3.12% in September 2010 and a loss of 1.97% in May 2010, with 9 positive and 3 negative months. "Alternative Alternatives" funds underperformed their two benchmarks: Hedge funds tracked by the HFRI Fund Weighted Composite Index returned 0.48% in January (+11.8% over the last 12 months), while global equity markets, represented by the MSCI World Index, posted another strong month with a gain of 2.19% in January (+17.4% over the last 12 months).
Regarding absolute and relative risk, both the A SQUARE Index and the A SQUARE Funds of Funds Index did better than their benchmarks over the analyzed 12-month period: Volatility (defined as annualized standard deviation) was 4.99% for the A SQUARE Index and 4.72% for the FoF Index, compared to 6.32% for the HFRI and over 19.82% for the MSCI World.
Market risk, measured by the corresponding beta values, was low for both A SQUARE indices, a result of the small volatility and low correlation of the funds listed in the A SQUARE database with both equity markets and hedge fund strategies (0.21 and 0.74 respectively for the A SQUARE Index).
The funds listed in the A SQUARE database thus managed to meet their target of delivering steady returns with low correlation to 'classic' investment strategies.
Historically, the A SQUARE single manager funds delivered steady, double-digit returns from 2004 to 2010 (with the exception of the financial crisis year 2008), ranging between 11.18% in 2010 and 17.16% in 2007, and outperforming the HFRI Fund Weighted Composite Index four times. During the crisis year of 2008, the A SQUARE Index provided significant downside protection, ending the year 2008 down 8.28%, compared to a HFRI decline of around 20%.
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