Sun, Nov 23, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Hedge funds lever up - Bank of America Merrill Lynch

Tuesday, October 09, 2012

Bailey McCann, Opalesque New York: Hedge funds have reversed a nine month trend, increasing leverage 5.4% year-on-year (YOY) according to new research from Bank of America Merrill Lynch Global Research. According to Mary Ann Bartels, lead hedge fund analyst at BofAML, leverage is up $286.6bn in August, after nine consecutive months of negative YOY growth since last November. The moves are a potential signal that investors expect equity markets will continue to trend to the upside in the near term.

Despite positive investor sentiments, report data shows that Q4 is likely to show overall underperformance from hedge funds despite a strong third quarter. "Since 1995, hedge funds outperformed the S&P 500 index by an average of 207bps in 3Q, and underperformed by 312bps in 4Q," Bartels writes. Historical data trends show that hedge funds tend to outperform in down markets and underperform when markets start to go up. The only time hedge funds were prepared for a year-end rally was the year 2000, when they posted strong numbers even as markets went higher.

The global diversified hedge fund index was up approximately 1.91% in 3Q’12 and up 3.31% year to date, still underperforming the S&P 500. In terms of individual strategies, Convertible Arbitrage was the best performer YTD and up 5.82%; Market Neutral performed the worst and was down 5.46%. Market Neutral and Equity Long/Short have both increased their market exposures to 1% net short and 19% net long respectively. Mac......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Greenlight Re CEO says hedge fund reinsurance strategy buzz is validating[more]

    From Artemis.bm: The attention being paid to the hedge fund reinsurance business model and the fact that others are now looking to leverage bits of it within their own strategies, is validating for reinsurer Greenlight Capital Re, according to CEO Bart Hedges. There has been an increasing buzz

  2. Legal - Hedge fund manager fights £8m tax tribunal ruling[more]

    From FT.com: A hedge fund manager who may have to repay £8m in tax is trying to overturn a tribunal ruling that found he had attempted to shelter millions in an avoidance scheme. Patrick Degorce, chief investment officer at Theleme Partners, lost a tax tribunal case last year. HM Revenue & Customs c

  3. Europe - Hedge funds face exit tax as Iceland central bank discusses plan[more]

    From Bloomberg.com: Hedge funds and other creditors with claims against Iceland’s failed banks face an exit tax as the island looks for ways to unwind capital controls without hurting the economy. The government targets having a plan it can present by year-end that would map out how Iceland will sca

  4. Investing - George Soros puts $500m of his money on Bill Gross, Soros, Paulson backed Hispania Activos mulls Realia takeover, Ex-Credit Suisse trader’s hedge fund sees yen shorts as crowded, Hedge hunters double default-swaps as views split, Large hedge fund positions come under pressure, Vikram Pandit's fund picks 50% stake in JM Financial's realty lending arm for $87m[more]

    George Soros puts $500m of his money on Bill Gross From WSJ.com: Before Bill Gross was fully settled in at his new firm, Janus Capital Group Inc., he received an unlikely visit from the chief investment officer of famed investor George Soros ’s firm, according to a person familiar with t

  5. Hedge fund Oceanwood raises $2bn, to close to new investors[more]

    From Reuters.com: Europe-focused hedge fund Oceanwood Capital Management is closing its fund to new investors after its assets under management hit $2 billion (1 billion pounds) recently, a source with direct knowledge of the matter said. Oceanwood, a multi-strategy hedge fund spinout from Tudor Gro