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How hedge fund strategies fared

  Managed futures, a strategy used by commodity trading advisers, produced the highest returns of any strategy in the CSFB/Tremont group of indices in 2002. By betting on increases in the prices of gold and oil, and on the depreciation of the dollar, commodity trading advisers produced returns of 18.33%.

Dedicated short-bias: indices show that funds following this strategy made easy money by shorting the tumbling markets, predicting that they would continue to fall. They made returns of between 15.84% and 18.14%.

Global macro funds, which take long and short positions across asset classes to express views on how major economic trends or events will affect an overall market, performed well in 2002. These funds, which take bets on national or regional markets, are the sort that such people as Malaysian prime minister Mahathir Mohamad love to hate. In 2002 funds in this category made returns of 14.66% from, among other things, taking bets on the depreciation of the US dollar, the strong showing of eastern European markets, and continued market falls in Latin America.

Some of the worst-performing strategies of 2002 were event-driven, such as M&A arbitrage, which suffered from a lack of deals to speculate on.

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