Mon, May 25, 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. Comment - Top hedge fund managers talk about how easy their jobs have gotten, BlackRock to Schroders warn of Argentina’s $20bn bond glut, The 35-year “investment supercycle” is drawing to a close, says Bill Gross, Gundlach: When the Fed starts hiking rates, 'GET OUT' of this asset class[more]

    Top hedge fund managers talk about how easy their jobs have gotten From Businessinsider.com.au: Time was, before the financial crisis hit, corporate boards treated multi-billion dollar hedge fund managers like Jehovah’s Witnesses pounding on their doors and flashing bibles. But no more.

  2. T Rowe's challenge to Dell deal may fuel critics of 'appraisal'[more]

    From Reuters.com: An increasingly popular tactic used by hedge funds and others to extract more money from buyouts could soon face a major courtroom test when a big investor in Dell Inc may argue that it should be paid a higher price for the 2013 acquisition of the PC maker. The strategy, known as "

  3. News Briefs - Ergen says LightSquared plan unfairly favors hedge funds, Why hedge fund managers make good advisory clients, I learned a lot about dad-bros after spending 4 days in Vegas with 2,000 hedge funders[more]

    Ergen says LightSquared plan unfairly favors hedge funds LightSquared Inc.’s bankruptcy plan gives hedge funds that invested in the broadband company a leg up while blocking telecommunications firms from competing with it, a fund owned by Dish Network Corp. Chairman Charles Ergen said in

  4. Opalesque Exclusive: SEC approves proposed changes to Form ADV, '40 Act - comment period to follow[more]

    Bailey McCann, Opalesque New York: Hedge funds and providers of liquid alternatives will want to pay close attention to proposed reforms approved by the SEC yesterday. The changes will require more frequent reporting, as well as a closer look into social media, liquid alternative strategies, and

  5. New market regime has created more dispersion between managers[more]

    Komfie Manalo, Opalesque Asia: The month of April has marked the transition toward a new market regime, Philippe Ferreira, Lyxor AM’s head of research, managed account platform, commented in the May 5's Weekly Briefing. "The first quart

 

banner