Strategies high in cash and gold holdings and those that aggressively shorted the market topped equity manager results for 2008 in Morningstar Inc.s separate account/collective investment trust fund database.
There was no clear pattern among the top-performing managers, reflecting the hectic nature of the markets, said Rachael Olson, an institutional analyst for Morningstars separate accounts/commingled funds data services in Chicago.
Theyre kind of all over the place, Ms. Olson said, noting that in most periods a clear consensus toward a particular style or capitalization that did best usually develops, but that is not the case currently. There is just so much volatility out there; there are not a lot of (clear) patterns in both equities and fixed income.
And the range of returns among the top 10 equity managers from 78.24% to -11.15% is unprecedented, Ms. Olson said.
The AdvantHedge bear market short-only portfolio run by Leuthold Weeden Capital Management, Minneapolis, recorded the high return for the year with 78.24%. In second place was Menlo Park, Calif.-based Leylegian Investment Managements equity composite strategy at 13.23%.
The median manager in the overall equity category returned -37.02%; the Russell 3000 index returned -37.31% for the same period.
The goal of the AdvantHedge strategy is to perform the inverse of the equity markets, said Matt Paschke, co-portfolio manager. By using a quantitative approach, the strategy seeks appreciation by identifying companies whose stocks are expected to decline in price and selling those stocks short.
Last year was the perfect environment for a strategy like this, he said.
Mr. Paschke said that while all sectors helped performance, the sector that contributed most to performance was technology, followed by consumer discretionary and financials. The strategy is restricted to short selling about 50 medium- to large-capitalization stocks. Mr. Paschke said he could not provide names of specific companies.
A lot of discipline revolves around shorting, he said. This is an emotional game to begin with, so we attempt to remove as much of the emotion as possible.
The firm has been managing the strategy since 1990. Interest has varied over time, depending on what the markets are doing, Mr. Paschke said.
Theres always more interest when people think the markets are overvalued and less interest when they think its undervalued, he said. Right now theres a ton of interest a lot of people are worried about the market.