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Alternative Market Briefing

For hedge funds, 2014 is the year of man vs. machine

Monday, December 22, 2014

Komfie Manalo, Opalesque Asia:

The year 2014 is proving to be the year of man vs. machine for the hedge fund industry, according to industry insiders.

Hedge fund managers who followed hidden value in unloved companies struggled in their performance this year, but those trend-following hedge funds who use complicated computer models to predict price movements across a variety of assets, including oil futures and currencies, have registered positive gains as commodity prices dropped.

Hedge funds that specialize in stock picking and those who trade around esoteric events were also hit by the plunging prices in oil. Even established hedge fund managers, such as John Paulson are also taking a hit this year.

The Paulson Recovery Fund, one of last year’s highest returning hedge funds, extended its 2014 losses in November. The $1.6bn fund declined 1.3% last month and is down 14% this year. Paulson & Co. created the fund in October 2008 to invest in banks, brokerages and insurance companies during the global financial crisis. It rose 63% last year. The pool, which has dwindled from $3.2bn in April, will be renamed the Paulson Special Situations Fund on Jan. 1, shifting focus to opportuniti......................

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