By Maiya Keidan

TORONTO, (Reuters) – Stock-picking Hedge Funds Globally Outperformed The broader Sector with Double-digit Returns in 2021 despite a year of volatility and a new force unpredictable retail traders flooding into market support for “meme stock”

According to data from eVestment, the average gain for equities hedge funds in 2021 was 12.3%, while peers made 10%.

Last year saw thousands of stock investors gather on social media sites to exchange information about stocks and short-sellers. This made the stock-picking process more dangerous.

Aberdeen’s global head for Investments, Alternative Investment Strategies, Darren Wolf, stated that there were so many potholes managers could have fallen into.

“In long-short Equity Land, you dealt with many issues during the year. This started with January’s meme short squeezes and had implications all year.

Wolf stated that long-short hedge funds managers reacted to last year’s market turmoil by decreasing their gross exposure, single-name shorts (bets on the fall of a stock) and shifting into exchange-traded funds (ETFs), as an alternative.

Anson Funds in Toronto, $1.5 billion-long-short, made 45.5% of its $950 million main hedge fund in 2021. This is why it has been crucial for trading to adjust for retail investors.

“People have always had this assumption that retail traders aren’t a market force, but retail became more active recently,” Moez Kassam, chief investment officer at the Anson Investments Master Fund, told Reuters.

    “This is the new investor crowd and it’s here to stay.”

The volatility of markets also caused a number of shocks for hedge funds, including the Omicron variant’s abrupt emergence in November.

Gladstone Capital (NASDAQ) Management in the UK, worth $2.7 Billion, is one example of an equity hedge fund that has benefited greatly from investment in financial, TMT and consumer markets in 2021.

A source familiar with the matter said that Gladstone received 7% and 20.4% in 2021 respectively, according to Reuters.