Hedge Funds High Water Mark
45% US Hedge Funds Say 1 or More Fund Under Water Mark
The relatively large number of hedge funds struggling to reach prior high-water marks in performance is just one of several findings from the 2010 Greenwich Associates/Global Custodian Prime Brokerage Study demonstrating the extent to which the hedge fund industry is still feeling the after-effects of the global financial crisis — despite a period of strong investment performance that has helped the industry put some of the worst consequences of the crisis behind it.
Almost 55% of the U.S. hedge funds participating in the Greenwich Associates/Global Custodian Study and 35-40% of hedge funds in Europe and Asia reported performance of 20% or better from the first quarter of 2009 to the first quarter of 2010. Around the world, nearly 70% of hedge funds delivered investment returns of 11% or better and nine out of 10 reported positive performance for the 12- month period.
“The fact that so many funds remain under their high-water marks after a period of historically strong market performance demonstrates how great an impact this crisis had on hedge funds of all sizes and strategies,” says Greenwich Associates consultant John Feng. “While many aspects of the market are normalizing, our study results show that the events of the past two years have resulted in lasting changes from pre-crisis practices.” Source