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Hedge Funds May Returns

Hedge Funds May Returns

Hedge Funds Post Biggest Loss in May Since November 2008

Hedge funds have been posting solid gains since 2009 but the average hedge fund suffered a setback in May.  In May hedge funds lost an average of 2.7%, likely a result of Europe's sovereign debt crisis which sent stocks, bonds and the euro diving.  This was the biggest loss for hedge funds since the industry dropped 3% stemming from the collapse of Lehman Brothers.
 Hedge funds lost an average of 2.7 percent through May 27, according to the HFRX Global Hedge Fund Index, as the sovereign debt crisis in Europe triggered declines in stocks, the euro and commodities, and the gap in yields between U.S. short-term and long-term debt narrowed. It was the biggest decline since November 2008, when hedge funds lost 3 percent in the wake of Lehman Brothers Holdings Inc.’s bankruptcy two months earlier.

Almost every strategy lost money in May, according to Hedge Fund Research Inc. in Chicago, as the Dow index of 30 big stocks sank 7.6 percent including dividends amid speculation that Greece’s debt problems would spread to nations such as Spain and Portugal. Some of the best-known funds saw their gains for this year erased.

“Attempting to manage risk in an environment where everything that could go wrong does go wrong seems like a fruitless endeavor,” said Brad Balter, who runs Balter Capital Management LLC. Source

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