NEW YORK (HedgeWorld.com)–Dow Jones reports that event-driven strategies performed well in what was an uneventful year for the stock market in general.
Both event-driven and distressed managers pulled through to each top 6% in 2005, according to Dow Jones Hedge Fund Index officials, doing slightly better than equities. The Dow Jones Wilshire 5000 index was up 6.38% at year-end.
Last month, event-driven managers gained 1.53% and returned 6.5% net of fees for the year through Dec. 31.
Event-driven managers generally capitalize on arbitrage opportunities stemming from the market’s reaction to specific transactions. An increase in merger and acquisition activity may be behind event-driven managers’ success, as most did battle with lower levels of market volatility. While 2005 performance was better than most other strategies, event-driven managers did better in 2004, when they were up 10.36%.
Distressed securities managers were up 6.48% for the year, which was likely disappointing after 2004′s gain of 15.46%. It does the fourth consecutive year that the category has posted gains, officials said.