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Large Hedge Funds See Assets Move | Understanding Returns

Large Hedge Funds

Large Hedge Funds See Assets Move

Unfortunately with current rules against hedge fund marketing or certain types of performance related announcements many hedge funds cannot report on their performance and this sometimes leads to a misunderstanding in their overall success or failure. There have been numerous reports within mainstream media regarding the performance of large hedge funds. The most notable stories have focused on the multi-billion dollar funds ran by some of the most well known professionals in the industry. Many of these funds get tagged within articles as having -25% performance, - 40% performance, etc. While this may very well be true within a few of their funds many of these large managers run 8-10 portfolios, all with $250M+ in assets. Many are able to weather these types of storms due to this built in diversification.

Here's a short article about performance seen from some well known hedge funds:

Hedge fund managers, after enduring the industry's worst month in a decade, are seeking to explain to investors what went wrong and what they are doing about it.

``We clearly underestimated several things, most importantly the tsunami of redemptions that are being delivered to hedge funds as investors line up to get out of these funds as well as record outflows from equity mutual funds,'' Jeffrey Gendell, who runs Greenwich, Connecticut-based Tontine Associates LLC, wrote in an Oct. 1 letter to clients.

``I am not a nervous person by nature, but should have been under the circumstances,'' wrote Gendell, whose Tontine Partners LP fund plunged 59 percent in September, leaving it down 67 percent for the year, according to investors. Gendell, 49, had expected shares of steel, engineering, airline and chemical companies to appreciate because of falling oil prices. Instead they plummeted.

Hedge funds, which endeavor to make money whether markets rise or fall, lost an average of 4.7 percent in September, the biggest monthly decline since August 1998, according to data compiled by Hedge Fund Research Inc. Funds fell 17 percent this year through Oct. 9, compared with the 38 percent decline by the MSCI World Index of stocks. It was the worst performance by the lightly regulated private pools of capital since the Chicago- based firm began collecting data. Read more...

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