Hedge funds post dismal Q3
results
EDGE funds finished the third quarter with their worst
showing since 1994, but many of the volatile funds
remained ahead of stock market indices for the year,
investment research and consulting firm TASS Management Ltd said
on Tuesday.
"This is a bad quarter and a bad year for hedge funds. However,
hedge funds traditionally can deliver comparable returns to the stock
market with about half the risk," said Hunt Taylor, executive director
of TASS.
Hedge funds -- unregulated investment pools for the wealthy -- have
been plagued by bad news in recent weeks, most notably the
US$3.5 billion (S$5.7 billion) bailout of troubled US hedge fund
Long-Term Capital Management arranged by the Federal Reserve.
The Fed has downplayed further attempts to try to regulate hedge
funds, with Fed governor Roger Ferguson urging caution about new
attempts at regulation at a conference on Tuesday.
TASS said funds that trade the bonds of emerging market nations
were the worst performers in the first three quarters, with average
losses of 35.66 per cent. Emerging funds were also the weakest
performers in the third quarter, down 26.97 per cent on average, the
report noted.
Earlier in the day, financier George Soros announced he would shut
down his US$1.5 billion emerging markets hedge fund, which has
lost 31 per cent of its value so far this year.
Comparably, stocks of investment banks and brokerage firms were
down 40 per cent in the third quarter, Mr Taylor said. Hedge funds
reported negative returns in all but two categories in the third
quarter, according to the report. -- Reuters
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