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From Kirsten Bischoff, Opalesque New York:

Hedge fund returns for June 2011 brought the first half of 2011 to a disappointing end and managers focused on positioning themselves for what they believe will be an economically challenging second half of the year. With indices reporting early estimates of June returns broad hedge fund indices are down anywhere from -1.59% (HFR) to -2.09% (BofAML Investable HF Index). A check-in with the BarclayHedge listings showed that hedge funds are in no hurry to report dismal June performance to databases.

Managers largely expected the first half of 2011 to be a continued recovery through until the second round of US quantitative easing was set to begin in July. However, the first half of the year was also punctuated by market rattling events such as the Japan earthquake/tsunami event, Greece tottering on the edge of default (reportedly followed closely by a few other countries), and most recently by US municipal problems such as the early July closing of all Minnesota state services due to the state government’s inability to pass a budget.

BarclayHedge and TrimTabs on Tuesday released a survey of managers that showed expectations that the remainder of 2011 is likely to be as rocky (if not rockier) than the first half. In the US, with the housing market still moving in the wrong direction and the debt problem "a massive headwind for the US economy" according to Meredith Whitney (and others), hedge fund managers al......................

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