Hedge Funds Outperform
Worst Month in 10 Years | Yet OutperformingThis article is being posted with our Hedge Fund Performance Category: While many have said September 08 to have been the worst month in the last 10 years for the hedge fund industry this articles notes that at least by the standards of two indexes the industry handily outperformed the S & P 500. Here's an excerpt:
Hedge funds measured by both the Greenwich Global Hedge Fund Index ("GGHFI") and the Greenwich Composite Investable Index ("GI2") significantly outperformed equity indices despite posting their greatest losses since August 1998 during September. The GGHFI and GI2 posted declines of -4.85% and -5.87% on the month, respectively, compared to global equity returns in the S&P 500 Total Return (-8.91%), MSCI World Equity (-12.08%), and FTSE 100 (-13.02%) equity indices. Year-to-date, the GGHFI and the GI2 shed -8.85% and -8.82%, respectively, while the S&P 500 Total Return, MSCI World Equity, and FTSE 100 Indices have lost -19.29%, -25.59%, and -24.07%, correspondingly. 24% of constituent funds in the GGHFI ended the month with gains.
"It was a perfect storm for both credit/equity markets and hedge funds in September. The already deflated values of financial firms provided the perfect trap for value investors while government intervention limited the ability of hedge funds to effectively mitigate their risk. Simultaneously, the continued freezing of credit markets combined with investor redemptions forced fixed-income funds to liquidate or otherwise mark down assets at depressed prices. The results of the market turmoil and unpredictable regulatory environment are evident in their returns this month," notes Thomas Whelan, CEO.
Long/Short Equity managers fared better than both US and foreign equity markets during the month, but still were subject to unpredictable market movements, losing -6.69%. Both Growth and Value funds struggled to find profitable trades, returning -8.16% and -7.05%, respectively. Short Selling managers by contrast enjoyed their most profitable month this year, advancing +9.27% on average. Year-to-date, Short Selling funds have gained 17% and remain the best performing subsector of hedge fund strategies. Read more...
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