Event-Driven Hedge Funds Gained 16 Pct in 2010 - Study

Hedge fund managers who deployed event-driven strategies gained more than 16 percent last year, outpacing their counterparts and the Standard & Poor's 500, according to a study conducted by industry consultant Hennessee Group.

The study also found that strategies focused on distressed and emerging markets saw strong gains in 2010 as well, generating respective returns of nearly 14.8 and 13.7 percent. The S&P 500 gained nearly 12.8 percent over the same period.

Directional strategies - such as those focused on events or emerging and distressed markets - tend to be more long-biased to the market and focus less on hedging. As a result, hedge funds that used these high risk, high reward strategies were better positioned to capitalize on last year's market rally, the study found.

"2010 was a rough year for non-directional hedge funds," Hennessee co-founder Charles Gradante said in a statement. "The market rally that commenced in early 2009 and continued through the end of 2010 benefited those strategies with elevated levels of exposure to the financial markets as they were able to benefit from the beta tailwind across most asset classes." As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio