Goldman's Global Alpha Falls 26% in 2007, People Say (Update1)
By Katherine Burton and Jenny Strasburg
Aug. 10 (Bloomberg) -- Goldman Sachs Group Inc.'s $8 billion Global Alpha hedge fund has fallen 26 percent so far this year, according to people familiar with the fund.
The decline in Goldman's largest hedge fund, managed by Mark Carhart and Raymond Iwanowski, follows the drop of about 9 percent in 2006, said the people, who declined to be named because the fund is private.
``It's hard to imagine how investors can maintain confidence, because their losses have been taking place over a long period of time, starting last year,'' said Virginia Parker, who helps oversee about $1.8 billion at Parker Global Strategies LLC in Stamford, Connecticut. ``There has been a broad range of market climates, and the fund has not demonstrated the ability to excel in any of them.''
Quantitative, or ``quant,'' hedge funds including those run by Goldman, Highbridge Capital Management LLC and Tykhe Capital LLC have lost money in August as credit spreads have widened and the volatility of stock prices has jumped, rendering useless the statistical models they use to make their bets.
Goldman spokesman Peter Rose declined to comment.
Global Alpha's performance has reduced the fees paid to New York-based Goldman. The biggest U.S. securities firm booked $700 million from the fund in 2006.
Goldman's Global Alpha losses may lead to more redemptions. Withdrawals for the fund's $6.2 billion offshore version totaled $394 million in the month ended June 30, according to an investor who declined to be identified. That was almost three times the $142 million in new money added.
Global Alpha decreased 8 percent during the last full week of July and was down 16 percent from the beginning of January through Aug. 3. There is an Aug. 15 deadline for Global Alpha investors who want to redeem money on Sept. 30. |
