The 20 Rising Stars of Hedge Funds 2008

Return Performance Highlights Challenging Period Among 100 top hedge funds, consistency proves elusive By Gregory Morris I IN DATA PROVIDED to Institutional Investor News by Crédit Agricole Structured Asset Management Advisers, hedge fund total returns clearly show that overall performance has continued to be strong. But the league tables also show that consistency remains an elusive goal. Looking at the three-year return percentages, there was a fairly clear delta between the top one or two funds and the rest of the leaders. Among the categories, the undisputed champion was emerging markets, where the top fund returned 557% over three years and even the tenth-place finisher returned 228% over the same period. So far this year, however, emerging markets have done poorly. If that circumstance carries through the year, it would make extending the previous years’ performance even more of a challenge for emerging markets managers in 2008. At the other end of the scale, there were only two categories where even the top performing fund returned less that 100% over three years. Those were convertible arbitrage and fixedincome arbitrage, where the league leaders could not quite break 60% for three-year returns. Again, market watchers said these strategies have been hit hard by credit conditions and a lack of liquidity. Even in non-cash transactions, counterparties have been demanding stricter collateral requirements, even on some top traders with extensive leverage. Out of the top 10 funds in 10 categories - a total of 100 funds - a scant three were able to finish first for one-, two- and three-year returns. Only three other funds managed to finish first in any two periods. In most categories, no more than four or five funds managed to even stay in the top 10 through all three years. In several other categories, just one or two funds managed that feat. Flexibility Equals Consistency Consistency also was elusive across fund families. Only a handful of funds had finishers in the top 10 in more than one MAY 2008 12 HEDGE FUND RISING STARS

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The 20 Rising Stars of Hedge Funds 2008 Contents Looking Great for 2008 A Matter of Supply and Demand Return Performance Highlights Challenging Period 20 Rising Stars of Hedge Funds Mentors' Page

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