In the EDHEC report, entitled Hedge Fund Performance in 2007, Véronique Le Sourd, Senior Research Engineer with the EDHEC Risk and Asset Management Research Centre provides a strategy-by-strategy account of the performance of each hedge fund strategy included in the EDHEC Alternative Indexes. While all hedge fund strategies posted positive returns, a majority saw a slight fall-off in performance compared to 2006. Only five of the thirteen strategies obtained higher returns than in 2006: CTA Global, Emerging Markets, Equity Market Neutral, Global Macro, and Short Selling.

As in 2006, the best performing strategy was Emerging Markets, with a return of 20.79%. It was followed by Global Macro and Long/Short Equity, with respective returns of 12.93% and 10.53%. The lowest return3.87%was obtained by Convertible Arbitrage managers. The volatilities of the strategies turn out to be quite low for the last three years, ranging from 1.61% for Fixed Income Arbitrage to 9.07% for Short Selling.

Contrary to the affirmations of numerous experts in August 2007 on the role of hedge funds in the subprime crisis and the consequences of the crisis for hedge funds, the results for 2007 confirm EDHEC's declarations on the subject: that hedge funds were probably more capable than other asset managers of coping with the crisis. A full version of EDHEC's position paper, Three Early Lessons from the Subprime Lending Crisis, can be found on the following page:

http://www.edhec-risk.com/site_edhecrisk/public/edito/RISKArticleEdito.2007-09-17.4732