Thu, Jul 2, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Fitch: Hedge funds performed well in Q4 2009 amid business model changes

Friday, February 05, 2010
Opalesque Industry Update - Fitch Ratings says that the hedge fund industry performed well in Q4 2009 (the broad HFRI composite index was up +2.7% in the quarter and +20.0% over 2009), and experienced a return of net new money inflows. Overall, 2009 saw the best hedge fund performance for a decade, according to Fitch's "Fund of Hedge Funds Quarterly - Q1 2010" newsletter, published today.

The hedge fund industry is experiencing fundamental changes to its business model and in its relationship with investors. "The development in 2009 of UCITS-compliant hedge funds, designed as a vehicle to provide both institutional and retail investors with a transparent and liquid access to alternative investments, has been interesting in that regard," says Aymeric Poizot, Head of Fitch's EMEA Fund and Asset Manager Rating group. The newsletter examines UCITS hedge funds in more detail and looks at the pros and cons behind these new fund structures.

Fitch observes that 2009 was dominated by "top-down" macroeconomic positioning, whereas "bottom up", individual asset selection and pure relative value trades remained on the sidelines awaiting a clearer macroeconomic picture and more fundamentally driven market conditions.
In this context, the most successful individual strategies were convertible bond arbitrage (which profited on both the equity and credit sides), emerging market equities and distressed credit, with the latter taking advantage of steadily declining corporate credit spreads.

"However, in general hedge fund managers agree that 2010 is likely to prove more challenging," says Olivier Fines, Associate Director in Fitch's EMEA Fund and Asset Manager Rating group. "Most of the evident benefits from the massive stimulus packages - liquidity and sustained demand - have probably been realised already, sovereign risk is rising, the pulse of the economy and the profitability in certain sectors are still weak and several market segments are still subject to potential default risk. For these reasons, a return to fundamental analysis may well be on the cards for 2010."

Fitch notes funds of hedge funds (FoHFs) suffered more than single-manager hedge funds from clients leaving alternative investments in 2008, and this continued into 2009 - largely because of their higher preponderance in high net worth (HNW) client portfolios. It so far remains unclear in early 2010 whether FoHFs can recover and demonstrate their legitimacy as the vehicle of choice for investors seeking to invest in the hedge fund universe. FoHFs have generally lagged hedge fund performance throughout 2009. However, Fitch believes that the use of risk-adjusted performance figures and the observation that FoHF returns show a higher consistency over time both support the perspective that these vehicles are practical providers of stable exposure (beta) to alternative investments.

The quarterly update is available at www.fitchratings.com.

- FG

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
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. Opalesque Exclusive: New systematic strategy managed alongside research firm outperforms S&P500[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: An emerging CTA manager explains how he runs his strategy, which is based on an index produced by a research firm. Peter Turk is head of

  2. Larry Robbins' hedge fund Glenview buys 1m Tenet Healthcare shares[more]

    Komfie Manalo, Opalesque Asia: Glenview Capital Management said it bought an additional 979,482 shares at Tenet Healthcare Corp valued at $53.80 million, raising its stakes in the healthcare services company to 15.16%, reported

  3. Legal - Grayson’s hedge funds under scrutiny for possible ethics violations, Court rejects hedge fund’s motion to block merger of Samsung affiliates[more]

    Grayson’s hedge funds under scrutiny for possible ethics violations From Freebeacon.com: Rep. Alan Grayson is finding himself in hot water over managing hedge funds that bear his name, actions that are in possible violation of House ethics rules. Sitting members of Congress are prohibite

  4. Hedge funds panic over Greece[more]

    Komfie Manalo, Opalesque Asia: Some investors are in panic mode as Greek Prime Minister Alexis Tsipras announced Sunday night that the banks and the stock market would be closed Monday, said

  5. Alternative investment industry could grow to $13.6tln in five years[more]

    Komfie Manalo, Opalesque Asia: Leading auditing and advisory group PwC said that the global alternative investment industry, which includes hedge funds, private equity and real assets, is set to increase to $13.6tln within the next five years. "Be

 

banner