Sun, Aug 30, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Most hedge fund indices end H1-10 in negative territory but avoid big losses

Tuesday, July 13, 2010
Opalesque Industry Update – The hedge fund history recorded its fourth worst first year-half this year (H1-10) since tracking began in 1987, according to Hennessee Group as most indices posted negative performance. However, hedge fund losses were very minimal compared with the S&P 500 Index which fell -7.57% during the period, the Dow Jones Industrial Average -6.27% and the NASDAQ Composite Index -7.05%, various index trackers reported.

The Hennessee Hedge Fund Index advanced 0.20% in the first half of 2010, the fourth worse six months since 1987, said Charles Gradante, Co-Founder of Hennessee Group.

Gradante commented: “The only years with worse performance in the first six months of the year were 2008, 2002, and 1994. In 2008, the credit crisis began to unfold in the first half of the year. In 2002, poor performance was due to most hedge funds reducing short portfolios as they attempted to pick the bottom of the dot com bubble. In 1994, hedge funds experienced losses as rising global interest rates caused bond prices to plunge. In addition, hedge funds experienced significant losses attempting to unwind highly levered carry trades as liquidity disappeared.”

The top performing sub-strategies in H1-10 were multiple arbitrage funds, including fixed income, distressed, event driven, convertible arbitrage and merger arbitrage. The Hennessee Global/Macro Index was one of the worst performers after it declined -1.93% in H1-10 on concerns about a global economic slowdown and sovereign debt crisis in Europe.

The HFRI Fund Weighted Composite Index fell -0.81% in H1-10 on the back of sovereign credit risk, currency policy adjustment, economic and energy market impact of the environmental disaster and concerns about slowing growth in both developed and emerging economies in the second quarter of this year.

Total hedge funds assets also fell as poor performance dragged asset value despite inflows. According to HFN, total industry assets fell an estimated -0.76% to $2.214tln in June, the second monthly decline in a row and the first month of net investor outflows since December 2009.

From January to June this year, total hedge fund assets increased by an estimated 1.99%, or $43.30bn said HFN as performance added an estimated $21.40bn and investors added an additional $21.90bn, the vast majority of which came in the first quarter of 2010.

Over the last two months, hedge funds performances were in the red. The Lyxor Global Hedge Fund Index, an investable index based on Lyxor’s hedge fund platform, was down 0.6% in June, but still in positive territory YTD with 0.1% gains.

The Down Jones Credit Suisse Hedge Fund Index fell 0.88% (est.) during the same month and is up 0.59% YTD.

But despite the poor showing of hedge funds in the first half of 2010, the industry outperformed benchmarks.

“Volatility and high correlation among asset classes have created a challenging investment environment. Managers’ risk management has performed well, protecting capital and limiting losses. While funds have not generated substantial positive performance, investors should be satisfied with lower drawdowns and lower volatility. Most funds remain conservatively postured, with a significant amount of cash to take advantage of opportunities, should markets stabilize during the second half of the year,” Hennessee concluded.
- Precy Dumlao

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. Commodities - Commodity hedge funds lose most in three years as rout deepens, Funds bet on Shell deal as oil prices plunge[more]

    Commodity hedge funds lose most in three years as rout deepens From Bloomberg.com: Hedge funds betting on commodities lost the most in almost three years in July as the price-rout deepened. Funds lost money for a third month, according to the Newedge Commodity Trading Index, which was re

  2. Investing - Hedge funds suddenly find real money is back in Argentina's debt, Elon Musk buys more SolarCity stock following hedge fund manager short, BlackRock plans to get into rental-home financing[more]

    Hedge funds suddenly find real money is back in Argentina's debt From Bloomberg.com: The real money is back in Argentina. Before the country’s default in July 2014 (its second in 13 years), most long-term investors abandoned its bond market. As they rushed out, Argentina became a favorit

  3. Activist News - Carl Icahn has snapped up a huge stake in Freeport-McMoRan, and the stock is ripping, Meet Europe's best activist investor[more]

    Carl Icahn has snapped up a huge stake in Freeport-McMoRan, and the stock is ripping From Businessinsider.com: Carl Icahn has picked his next target: Freeport-McMoRan. Icahn and a group of other investors have snapped up an 8.46% stake in mining company Freeport-McMoRan, according to a j

  4. North America - Hedge fund manager Ray Dalio’s challenge to the Fed[more]

    From Newyorker.com: For some reason, Janet Yellen, the chair of the Federal Reserve, decided to skip this year’s annual Fed conference in Jackson Hole, where monetary policymakers from the United States and abroad get together with some prominent academics to discuss the big issues of the moment. Th

  5. JTC acquires Kleinwort Benson’s fund administration business[more]

    Bailey McCann, Opalesque New York: JTC has completed the acquisition of Kleinwort Benson’s fund administration business, boosting assets under administration (AuA) to $56 billion. Kleinwort Benson is based in the Channel Islands, South Africa. The transaction, which relates to the whole of K

 

banner