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Risk on, risk off creating a roller coaster ride for hedge funds - Man

Monday, September 13, 2010
Opalesque Industry Updates – “Risk on, risk off is creating a roller coaster ride for hedge funds,” says Michelle McCloskey, Head of Research at listed hedge fund provider Man said in an industry overview released by the firm on Monday. “This month’s flat returns are slightly misleading. Hedge fund returns are widely dispersed. There are some big winners as well as big losers. That’s why we believe that an experienced, well resourced hedge fund allocator can really add value now.”

August performance was focused on dialing back risk in the face of bearish economic fundamentals, says the firm. The firm also points out that:

- Equity hedged managers lost money in August, but succeeded in limiting downside compared to broader financial markets
- Event driven hedge funds lost money as a collapse in post-reorganization equities impacted distressed positions
- Special situations managers struggled to eke out returns despite a busy month for M&A.

Hedge fund indices in August reflected the struggles of the month – with most of the industry returning flat to slightly positive performance. Managed futures returned 3.0% (Eurekahedge) and macro funds delivered +0.93% (Eurekahedge).

“At times like these, when equity related styles are struggling, it is especially helpful to have sizeable allocations to managed futures and global macro. Managed futures has not always been well regarded by institutions but managed futures managers have proven again this year that they can provide great insurance against falling equities,” says McCloskey.

Corporate website: Source

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