September Hedge Fund Performance
I met for coffee this morning with a potential consulting client, a US-based hedge fund manager. Like most I have connected with recently this fund is trading lightly and holding heavy cash positions to hopefully come out of this market cycle with a few percentage points to show for it. Yesterday I heard one hedge fund manager note that they were only down 9% so far this year with a note "pretty good all things considered." A bit different than the performance which was being posted last year a this time...One a positive note this will hopefully leave fertile ground for strong growth for those who do survive. Those who can navigate the next 1-3 years of rough markets could be handsomely rewarded.
Here's an excerpt from a recent article on September hedge fund performance:
Hedge funds are continuing to feel the pinch of a tanking global economy, with two major indices of hedge fund performance releasing data late Tuesday that show historical losses for the industry in September.
The HFRI Fund Weighted Composite Index declined almost 4.7 percent for the month of September, while the Hennessee Hedge Fund Index dropped 6.5 percent for the month.
That brings the full year decline for the HFRI Fund Weighted Composite Index to almost 9.6 percent and was the second worst monthly performance since the group that conducted the study, Hedge Fund Research, Inc., began recording data 18 years ago.
“The dislocations throughout financial markets and the hedge fund industry in the month of September represented a level not experienced in over a decade, since August 1998,” said Ken Heinz, president of Hedge Fund Research, Inc., in an interview with Markets Media.
Charles Gradante, co-founder of Hennessee Group, which conducts the Hennessee index, echoed that assessment and attributed some of the drop to a recent ban on short selling.
“Despite being defensively positioned, September was the worst month for hedge funds in over a decade,” said Gradante. “The ban on short selling caused significant losses across most strategies and required funds to alter their trading models.”
Heinz said the worst losses for hedge funds occurred in August of 1998, when the sector tanked 8.7 percent for the month. Read more...