Thu, Mar 28, 2024
A A A
Welcome Guest
Free Trial RSS pod
Get FREE trial access to our award winning publications
Alternative Market Briefing

Hedge funds lever up - Bank of America Merrill Lynch

Tuesday, October 09, 2012

Bailey McCann, Opalesque New York: Hedge funds have reversed a nine month trend, increasing leverage 5.4% year-on-year (YOY) according to new research from Bank of America Merrill Lynch Global Research. According to Mary Ann Bartels, lead hedge fund analyst at BofAML, leverage is up $286.6bn in August, after nine consecutive months of negative YOY growth since last November. The moves are a potential signal that investors expect equity markets will continue to trend to the upside in the near term.

Despite positive investor sentiments, report data shows that Q4 is likely to show overall underperformance from hedge funds despite a strong third quarter. "Since 1995, hedge funds outperformed the S&P 500 index by an average of 207bps in 3Q, and underperformed by 312bps in 4Q," Bartels writes. Historical data trends show that hedge funds tend to outperform in down markets and underperform when markets start to go up. The only time hedge funds were prepared for a year-end rally was the year 2000, when they posted strong numbers even as markets went higher.

The global diversified hedge fund index was up approximately 1.91% in 3Q’12 and up 3.31% year to date, still underperforming the S&P 500. In terms of individual strategies, Convertible Arbitrage was the best performer YTD and up 5.82%; Market Neutral performed the worst and was down 5.46%. Market Neutral and Equity Long/Short have both increased their market exposures to 1% net short and 19% net long respectively. Mac......................

To view our full article Click here

Previous Opalesque Exclusives                                  
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. KKR raises $6.4bn for the largest pan-Asia infrastructure fund[more]

    Laxman Pai, Opalesque Asia: The New York-based global investment firm KKR has raised a record $6.4bn for its second Asia-focused infrastructure fund, underlining investors' continued appetite for private markets. According to a media release from the alternative assets manager, the figure top

  2. Bucking the trend, top hedge fund makes plans for a second SPAC[more]

    From Institutional Investor: SPACs aren't dead. At least not to the folks at Cormorant Asset Management. The life sciences firm, whose hedge fund topped its peers in 2023, is confident it will match the success of its first blank-check company. Last week, the life sciences and biopharma speciali

  3. Benefit Street Partners closes fifth fund on $4.7 billion[more]

    Bailey McCann, Opalesque New York: Benefit Street Partners has closed its fifth flagship direct lending vehicle, BSP Debt Fund V, with $4.7 billion of investable capital across the strategy. Benefit Street invests primarily in privately originated, floating rate, senior secured loans. The fun

  4. 4 hedge fund themes that are working in 2024[more]

    From The Street: A poor earnings report from Tesla (TSLA) has not hurt the indexes on Thursday. The decline in Tesla stock, which is losing its position in the Magnificent Seven pantheon, is more than offset by strong earnings from IBM (IBM) and ServiceNow (NOW) . In addition, the much higher-t

  5. Opalesque Exclusive: A global macro fund eyes opportunities in bonds[more]

    Bailey McCann, Opalesque New York for New Managers: Munich-based ThirdYear Capital rebounded in 2023, following a tough year for global macro. The firm's flagship ART Global Macro strategy finished the year up 1