Despite hard-hitting headlines of high fees and underperformance, returns across the hedge fund industry have bounced back in recent months despite largely flat equity markets, near zero interest rates and inverted swap spreads.

The leading benchmark, HFRI Fund Weighted Composite (FWC) Index, gained +0.4% in May bringing the year-to-date performance to +0.74%, topping most equity market indices, including the Nasdaq, Nikkei, FTSE, DAX and Shanghai Composite.

“There’s been a tremendous amount of misinformation recently regarding hedge fund performance,” suggests Ken Heinz, president of Hedge Fund Research (HFR). “Our role is an increasingly important one – to provide investors, asset managers and service providers with visibility, transparency and knowledge of hedge fund performance trends across strategies and regions through our data, indices and reports.”

Established in 1992, HFR was the first company to track and analyse the global hedge fund industry and is now classed as the sector’s go-to benchmark provider with 150+ indices ranging from industry aggregate analysis to the most esoteric and niche areas of sub-strategy and regional investment focus.

A database covering thousands of hedge funds, fund-of-funds and managed futures investment products is an increasingly important part of the firm’s offering while HFR’s reports are also in demand due to detailed statistics on hedge fund industry size, assets, asset flows and fund launches & liquidations.

“Our work has taken on huge significance in recent years,” explains Heinz. “Institutional investor allocations to alternatives continue to grow and an increasing portion of those investments are tied to benchmarks, which have become crucial points of reference.”

Heinz adds that investors now consider changes to their allocations at regular intervals, quarterly or even monthly, whether performance is good or bad. That’s a notable shift compared to previous years and one which results in indices being continuously revisited and analysed in-depth.

Given that benchmarking has become a focal point for investors, particularly in the hedge fund space, much of HFR’s work has been focused on education, allowing investors to decompose an index and find out the drivers behind performance and visualise metrics on screen.

“We’re building tools that allow our clients to filter benchmarks, self-examine index constituents and track performance on a daily basis,” Heinz adds. “It’s all about providing that higher level of understanding and servicing the demand for more insight and timely data. The ability and facility of our subscribers to ‘cut & slice’ this data to carry out bespoke analysis is second-to-none.”

Increased investor appetite has not only led a wider adoption of HFR’s traditional set of HFR Indices including the HFRI, HFRX & HFRU but also the creation of new products. A new family of indices, HFRL, was launched last year to represent the performance of liquid funds and offers intra-day and well as end-of-day pricing.

Chicago-based company’s HFRX Diversity Index series, which reflects the performance of the segment of the US hedge fund management industry owned by women and members of minority groups continues to attract clients. The benchmark shows women-owned and managed funds have outperformed industry-standard HFR indices nearly every year since 2007, when HFR first introduced indices tracking the performance of diversity managers.

“We first introduced the concept of diversity indices nine years ago, so we were a little bit ahead of the curve,” explains Heinz. “The financial crisis hampered interest in the products for a while but now we’re seeing a big response. Clients want to discover and learn about funds run by women and ethnic minorities.”

Aside from product expansion, HFR has been growing its geographical presence. Its Asian Hedge Fund Industry and Emerging Markets reports, for example, delve into the current trends and characteristics of the fastest growing areas of the hedge fund industry.

A brand new website, launched earlier this year, has complimented HFR’s development. “We’re determined to continue our role as an industry leader and innovator and believe our products have and will continue to cover the most important years of the hedge fund industry’s development.”