Last year may not have been a stellar year for hedge fund returns but latest data reinforces a picture of solid investment performance for this sector, new figures from Chicago-based Hedge Fund Research show.

The organisation’s HFRI Weighted Composite Index, measuring average performance after fees have been deducted, showed returns of 3.15 per cent in December 2010, bringing returns for the whole of last year to 10.42 per cent. That compares with a positive performance of 2.25 per cent for December as measured by the Lyxor Hedge Fund Index.

Not surprisingly, the HFRI EH Short Bias Index, which is designed to reflect returns made when markets go down via short-selling, showed a low of 21.30 per cent in 2010. The biggest gainer last year was the HFRI EH Energy/Basic Materials Index, with returns of 15.98 per cent. Another strong showing came from the HFRI RV Multi-Strategy Index, at 13.93 per cent.

The Lyxor Hedge Fund Index clocked up a positive performance of 2.25 per cent in December, meaning that for the full year it rose 5.82 per cent, according to Lyxor Asset Management, a subsidiary of France’s Société Générale.