Hedge Funds Get Their Assets Kicked
09-07-2007 | Source: Hedge Fund Daily
Hedge fund performance in August was one of the worst since 1998, when the collapse of Long Term Capital Management was making headlines.
According to Hedge Fund Research, 19 of the 20 HF strategies it tracks were down, with only one in positive ground (which was coyly not reported), leaving overall returns in the dust at -2.55%.
Particularly pummeled was HFR’s Macro Index, which lost a whopping 8% last month. The verdict is that hedge funds weren’t worth the hefty fees they charge to outperform when markets go bad, as they landed on their collective duffs, along with the equity markets.
“Much of the money invested in hedge funds goes into long/short,” one HF insider told Times of London.
“These guys are pretty similar to conventional long-only managers. The main thing that distinguishes them is the outrageous fees they charge.”
The truth is, however, that some hedge funds, did give investors a bang for their buck. Lawrence Staden of GLC Partners told the Times, “I mean, don’t get me wrong – our fees are just as outrageous as the next man’s,but well, we did make 13% in August.”
Likewise, Martin Coward of IKOS said his firm’s equity products rose “between 3% and 5%” in August. But for most, the dog days of summer left many in the industry with their tails between their legs. Explains an unnamed hedgie in an interview with the Times, “A lot of these long/short funds have spent the last five yeas buying up a particular line of stock, pushing prices higher, which in turn make their performance look better. In August, you got a flavor of what would happen if they ever had to sell those stocks.”
but well, we did make 13% in August.” Likewise, Martin Coward of IKOS said his firm’s equity products rose “between 3% and 5%” in August.
But for most, the dog days of summer left many in the industry with their tails between their legs. Explains an unnamed hedgie in an interview with the Times, “A lot of these long/short funds have spent the last five yeas buying up a particular line of stock, pushing prices higher, which in turn make their performance look better. In August, you got a flavor of what would happen if they ever had to sell those stocks.” |
