Mortgage funds roared home with returns of almost 19 percent last year, trouncing all other hedge fund strategies and beating the S&P 500 stock index, which rose 13 percent.
BTG Pactual’s $245.5 million Distressed Mortgage Fund, which invests primarily in distressed non-agency Residential Mortgage-Backed Securities (RMBS), returned about 46 percent for the year, putting it at the top of HSBC Private Bank’s list of the Top 20 performing hedge funds and making it one of 2012′s best performing funds. Bear in mind the the average hedge fund gained only 6 percent last year.
HSBC’s hedge fund platform features hundreds of funds, including many of the industry’s biggest and best known managers, and the bank releases regular performance updates throughout the year.
In fact the Brazilian bank claimed two spots on HSBC’s Top 20 list, with its Global Emerging Markets and Macro Fund gaining 28 percent. In a year-end note to investors in the distressed mortgage fund, which was reviewed by Reuters, the portfolio manager said those returns “exceeded even the loftiest of our expectations.”
Like many of last year’s winners, that BTG fund is no behemoth in terms of assets. (For more on the crop of smaller funds that bested many of the big brand name firms last year, see my colleague Svea Herbst-Bayliss’s story from last week.)