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Benedicte Gravrand, Opalesque London:
The first most significant development in the last quarter is that hedge funds are on their way to recovery. Hennessee, a U.S.-based hedge fund advisor, reported yesterday that it was up 1.7% in November (+22.4% YTD), underperforming the equity market's rally as the S&P 500 rose 5.3% (+20.8% YTD) and the Dow Jones Industrial Average increased 6.5% (+17.8% YTD). And Hedge Fund Research (HFR), a Chicago-based data provider, reported that the HFRI Fund Weighted Composite Index had gained 1.75% in November, bring YTD gains to 18.8% and "keeping the industry on pace for the best calendar year performance in a decade."
But while there were signs of a rally, two-thirds of hedge funds had not recovered from 2008 by the end of the third quarter - so many managers were still not in a position to collect performance fees at the end of September. This is probably one of the few times that high water-marks (which ensure that managers don't get paid for negative performance) have been so much talked about in the industry.
Hedge funds have been investing in gold - a lot - as well as in stocks, in oil and are steering away from the US dollar. In the third quarter, they increased their leverage to invest in equities, and showed their greatest appetite for stock market risk in two years.
There has been an increase in start-ups in the last three months, in hiring, and in the number of new managed accounts and managed account plat...................... To view our full article Click here
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