Singapore Hedge Fund Start-Ups

Singapore Competing With Hong Kong for New Hedge Funds

Singapore is competing with Hong Komg to attract new hedge funds. New hedge funds are launching in Singapore after the country approved a new law that doesn't demand a licensing requirement. This has allowed Singapore to compete directly with Hong Kong as a popular hedge fund destination.

Singapore hedge fund startups are on the rise after the central bank approved new rules that didn’t impose a licensing requirement on most funds.

Seven new hedge funds set up in May and June, according to Eurekahedge Pte, after the Monetary Authority of Singapore said in April that small funds can keep operating without a license as part of its review. The number of new funds last year fell 13 percent to 26, the lowest since 2003, as uncertainty over pending rule changes kept managers away, according to data from the Singapore-based industry researcher.

“Singapore did not shoot itself in the foot by putting up proposals that will kill off the business,” said Kher Sheng Lee, a senior associate in the financial services group at Philadelphia-based law firm Dechert LLP in Hong Kong.

Source

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Actively Traded Long/Short ETF

Hedge Fund Launches First Actively Traded Long/Short ETF

A hedge fund has launched what it is billing as the first actively traded long/short ETF. The hedge fund firm, Mars Hill Partners, launched the Mars Hill Global Relative Value ETF on the NYSE this month.

The Mars Hill Global Relative Value ETF debuted on the New York Stock Exchange earlier this month. Bethesda, Md.-based AdvisorShares said it was “the industry’s first actively-managed long/short ETF.”

“We are very excited to partner with AdvisorShares to package and launch GRV given the underlying merits of our long/short investment strategy when combined with the daily liquidity, fully transparent and tax efficiency benefits of an NYSE-listed ETF,” Mars Hill founder Jason Huntley said. “Historically, strategies like ours have been accessible primarily through separate accounts or private hedge funds, neither of which offers anywhere near the benefits of the ETF package which includes transparency.”

The new ETF invests in ETFs covering countries, sectors and industries deemed most attractive by Mars Hill. It then puts an equal amount of money into shorting what the firm sees as the least attractive countries, sectors and industries. Source

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Commodity Trading Q&A

The Global View on Commodity Trading from Brazil

In the most recent issue of Opalesque Futures Intelligence, Gabriel Pellegrini of Global Edge Capital Management offers his view on commodity trading from Brazil. Pellegrini is a commodity trader from São Paulo, Brazil managing his own firm Global Edge Capital Management which returned 8.6% last year and 23.3% in 2008. In this interview, Pellegrini explains how he entered commodity trading, why he entered international markets, his investment strategy and gives a view on the industry from Brazil.

Opalesque Futures Intelligence: How did you get into futures trading?

Gabriel Pellegrini: My first job was at the Brazil futures exchange and I traded in only Brazilian markets for about four years. Then I started to trade in international markets. By 2003 I had learnt about systematic futures trading and looked for a firm that did this, but I could not find one in Brazil at that time. I traded Brazilian futures for myself and in 2008 opened Global Edge Management.

OFI: Why did you move to international markets?

GP: For quantitative trading, you need a lot of liquidity. We don’t have many liquid markets in Brazil. At the time, there was only one agricultural market in Brazil where I could do quantitative trading and that was coffee. But I traded the financials, including FX – the US dollar vs. the Brazilian real – and interest rates. Those are highly liquid. Source

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Hedge Fund Bonus Restrictions

FSA Moves to Impose Hedge Fund Bonus Restrictions

The Financial Services Authority--the UK's financial regulating body--has moved to impose bonus rules on hedge funds. Initially it was thought that the FSA would give hedge funds a pass and only apply the restriction to banks. The proposal will require half of any bonus to be non-cash such as shares. Furthermore, 40% of this bonus will have to be distributed over 3 years and if it exceeds £500,000 then 60% must be deferred.

The U.K. Financial Services Authority plans to impose strict bonus rules on the country’s hedge funds, bringing Britain into line with recently-approved European Union restrictions.

The FSA said it would extend bonus rules that already apply to the country’s 27 largest lenders to more than 2,500 firms, including asset managers and hedge funds. Under the proposal, at least half of any variable remuneration must be paid in shares or some equivalent non-cash instruments. In addition at least 40% of bonuses will have to be paid out over three years; if the bonus exceeds £500,000, 60% must be deferred.

It is unclear exactly who will be covered by the new rules. The FSA said that those employees who “have a material impact on a firm’s risk profile” will have their bonuses subjected to the restrictions.

The regulator is welcoming comments on the proposals through October, and plans to implement the new runs on Jan. 1. Source

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SEC Hedge Fund Comments

SEC Asking Hedge Funds for Comments on Regulations

The Securities and Exchange Commission has asked hedge funds for comments on regulations. The SEC wants to get a sense of what hedge fund managers think about the provisions in the Dodd-Frank financial reform bill.

SEC Chairman Mary Schapiro said in a speech Thursday to the U.S. Chamber of Commerce that hedge funds “have flown under the regulatory radar for far too long.”

“The lack of a comprehensive database for private funds has made it virtually impossible to monitor them for systemic risk and investor protection concerns,” she said.

Last week, however, in Congressional testimony, Schapiro said she wasn’t sure if hedge fund firms posed a systemic risk to financial systems.

Schapiro also said in her speech that the SEC had been working closely with the U.K.’s Financial Services Authority on hedge fund reporting requirements.

Whatever the position the U.S. regulator may take on the systemic risk issue, the public is being encouraged to go to the SEC Web site and fill out a comment form even before the official regulation comment periods are opened. Source

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Hedge Funds Talent Shift

Hedge Funds Talent Shift Before Regulatory Changes

Anticipation of regulatory changes has driven a new hedge fund hiring and talent shift. The Volcker Rule especially has had an impact on hedge funds' and banks' abilities to hire and retain talent.

"Huge anticipation around regulations including the Volcker Rule will have ramifications for the rest of 2010 and beyond," says Mr. Edwards, Global Head of Financial Services and U.S. Hedge Fund Sector Leader with Heidrick & Struggles.

The report examines hedge fund talent trends as the sector recovers from 2008, even as current market instabilities threaten some of the growth. The report's authors also identify industry-changing factors, such as the Volcker Rule, that will affect hiring not only over the coming months, but for years to come.

"The first half of 2010 saw a much healthier hiring market than last year, but there remain a lot of fresh wounds from 2008 that have re-opened during the recent bearish trends," says Chad Astmann, the head of Heidrick & Struggles' North American Asset Management Practice and a co-author of the report. "Money is flowing into funds -- but cautiously. We are already seeing a shift in where talent is needed, and where it is landing." Source

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Hedge Fund Managers Hiring

Hedge Fund Managers Cautiously Resume Hiring

Hedge fund managers are wary about hiring staff again after the financial crisis. But after large job cuts in the industry, it appears that hedge funds are once again hiring. Recent data shows that hiring in the asset management industry increased by 20% in the first half of 2010.

Hiring in the asset management industry increased by 20 per cent in the first six months of the year, compared to the same period in 2009, according to Powerchex, a pre-employment screening company for the financial services sector.

“Asset managers are talking about growing their business again,” says Andrew Evans, managing director at Morgan KcKinley, a financial services recruitment consultancy.

Signs of a UK pick-up also come from a recent survey by PwC and the CBI employers’ organisation, which showed headcount in financial services rose at the fastest pace since June 2008 in the April-June period, the fifth consecutive quarter of expansion. Further rapid growth is also expected during the current quarter. Source

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Nonresident Hedge Fund Tax

Governor Paterson Backpeddles on Hedge Fund Tax

New York's Governor Patterson appears to have dropped the proposed tax on hedge fund managers working in New York but living in Connecticut. His press secretary explained his position on the issue: "That provision was removed and will be removed again when the governor submits a proclamation for special session for Wednesday when he calls the legislature back."

The proclamation aims to call for a special session of the state legislature to consider measures required to complete the state budget.

The proposal to tax nonresident hedge-fund managers, which would raise an estimated $50 million a year to help bridge New York's $9.2 billion current-year deficit, has sparked concerns that managers would relocate their funds to neighboring Connecticut. Its governor, Jodi Rell, said she would welcome the funds with open arms.

Tim Selby, president of the New York Hedge Fund Roundtable and an attorney at Alston + Bird LLP, said he welcomed Paterson's decision.

"I am encouraged that our legislative body in New York was open-minded enough to see the likely consequences of an ill-conceived piece of legislation before it was too late," he said. "This could have been the commencement of a tipping point that would gave been disastrous for New York City." Source

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Hedge Funds in Connecticut

Connecticut Luring Hedge Funds Away from New York

As previously reported, the New York State legislature is looking to tax hedge fund managers that commute from Connecticut to work in New York. Connecticut has responded by attempting to lure hedge funds into moving from the Big Apple to Connecticut. As Mayor Bloomberg warns, the movement--led by Connecticut governor Jodi Rell--is already gaining traction among the hedge fund industry. To watch a video report on this hedge funds in Connecticut, follow this link.

When Albany lawmakers last month proposed a tax hike on hedge-fund managers, Mayor Michael Bloomberg called it the best thing to ever happen to Connecticut. Sure enough, Connecticut governor Jodi Rell is now making a personal pitch to New York-based hedge funds, inviting them to relocate.

"She’s doing what she should do. And we should be out there doing the same thing -- making this a more attractive place to do business. There’s some things the city can do and we’re doing those, I think. the state is not doing its job," said the mayor.

What the state is considering would target hedge fund managers who work in New York but live out-of-state. Right now, the money they earn from managing investments is taxed only in their home state. Under the proposal floated by Governor David Paterson, that money would be taxed in New York like ordinary income, raising an estimated $50 million a year.

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Hedge Funds in Connecticut

Connecticut Luring Hedge Funds Away from New York

When Albany lawmakers last month proposed a tax hike on hedge-fund managers, Mayor Michael Bloomberg called it the best thing to ever happen to Connecticut. Sure enough, Connecticut governor Jodi Rell is now making a personal pitch to New York-based hedge funds, inviting them to relocate.

"She’s doing what she should do. And we should be out there doing the same thing -- making this a more attractive place to do business. There’s some things the city can do and we’re doing those, I think. the state is not doing its job," said the mayor.

What the state is considering would target hedge fund managers who work in New York but live out-of-state. Right now, the money they earn from managing investments is taxed only in their home state. Under the proposal floated by Governor David Paterson, that money would be taxed in New York like ordinary income, raising an estimated $50 million a year.

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Hedge Fund Industry Inflows 2010

Hedge Fund Industry Inflows

Hedge Funds Pull in $9.5 Billion in Q2 2010

While hedge funds have not made the kind of recovery in total assets that many expected, billions of dollars are still flowing into the hedge fund industry. Hedge funds attracted $9.5 billion in quarter 2 of 2010, according to recent research.

Hedge fund managers have seen flat returns on average as they have battled a volatile market so far this year, but that hasn't stopped wealthy investors from sinking more cash into the industry. Strategies like global macro and event-driven funds that may insulate investors from stock market swings, have been seen as particularly attractive.

The fund industry's most established firms with more than $5 billion in assets under management, saw $8.8 billion of the total inflows in the second quarter, according to HFRI.

"The hedge fund industry continues to be dominated by investor preference for robust fund infrastructure, encompassing enhanced liquidity and transparency," Ken Heinz, president of HFRI, said in a statement. Source

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Post-Crisis Hedge Fund Investors

Hedge Fund Investors Still Wary Post-Crisis

According to recent data, hedge funds are not recouping losses suffered during the recession. Hedge funds made great gains in 2009, but investors aren't flooding back to the extent that managers expected. There is even a small outflow from hedge funds in the first half of 2010 according to Credit Suisse.

There are good reasons, Breakingviews says. First, after the 2008 debacle, retail investors, who once were eager hedge fund customers, at least outside the United States, have lost enthusiasm. Institutions, meanwhile, are taking their time setting strategy, the publication says. Second, hedge fund clients still haven’t forgotten that many managers locked up their assets at the height of the crisis, Breakingviews notes. Credit Suisse estimates that about a third of the $174 billion of assets frozen in that way still haven’t been thawed by their managers.

Third, recent market gyrations have left investors uncertain. After losing big as asset values plummeted in the crisis, plenty of investors see the merits of hedge-fundlike strategies that employ both long and short bets. But they have no reason to hurry with markets volatile and seemingly in limbo, Breakingviews suggests. The problem for hedge fund managers is that those same conditions, along with intensifying regulation, force them to be cautious, reducing the likelihood of big returns, the publication says. So until markets turn friendlier, the industry may struggle to grow much. Source

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Hedge Funds Mary Schapiro

Hedge Funds Potential Threat

SEC's Schapiro Unsure Whether Hedge Funds Pose Threat

Mary Schapiro, the head of the Securities and Exchange Commission, told Congress this week that it is "really not clear" whether hedge funds pose a potential threat to the U.S. economy. This is a different tone than what the regulatory body previously used when discussing stiffening regulation of hedge funds and gives some hope to those looking to avoid changes to how hedge funds are monitored and the compliance fees that such changes would require.

“It’s really not clear” whether the hedge-fund industry presents “systemic risks,” Schapiro said at a House Financial Services subcommittee hearing. “It will be very important” for regulators “to decide where the lines are drawn.”

Legislation approved by Congress last week establishes the Financial Stability Oversight Council, a super-regulator including officials from the SEC, Federal Reserve and Treasury Department that will monitor market participants with potential to roil the economy. The council, which would have authority over hedge funds it deems systemically risky, could direct the Fed to halt lines of business.

The bill overhauling financial-industry regulation also requires hedge-fund managers to register with the SEC, making them subject to disclosure requirements and agency inspections. Source

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Funds of Hedge Funds Financial Crisis

Funds of Hedge Funds Manage to Survive Financial Crisis

Funds of hedge funds have survived the financial meltdown, contrary to many predictions. Funds of hedge funds may have survived the worst but the industry took some heavy damage, causing many FOFs to shut down. Most of the largest funds of hedge funds have managed to stay afloat through the crisis, according to recent data.

Investors started pulling out their money in the middle of 2008 and, apart from a small respite at the end of last year, they continued taking it away for the next 21 months and counting, according to data provider Hedge Fund Research.

But a list of the largest funds of hedge funds managers, ranked by the assets they run for pension schemes, and prepared by investment consultancy Towers Watson, shows most of them have survived.

Of the 20 largest fund of hedge funds managers at the end of 2006, 15 were still there at the end of last year.

Two of 2006’s largest managers were hit hard by the crisis: Union Bancaire Privée Asset Management and Bank of New York Mellon.

Union Bancaire Privée Asset Management, a division of a Swiss private bank, was managing $2.3bn of pension scheme assets at the end of 2006, placing it 17th in Towers Watson’s list; but at the end of last year, it had dropped out of Towers Watson’s top 50. Source

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Anthony Ward Cocoa

Hedge Fund Manager Buys 7% of Global Cocoa Production

Hedge fund manager Anthony Ward has bought up a sizable portion of the world's cocoa beans. Mr. Ward has used his fortune gained through his Armajaro hedge fund to purchase 240,100 tons of cocoa beans for $1 billion. With that purchase he can produce roughly 7% of the world's annual production.

A chocoholic? Maybe. A former Chairman of the European Cocoa Association, who is also called "Chocolate Finger" by fellow traders, he is known for appreciating good food and wine. But more importantly, 50-year-old Ward owns such a large part of the cocoa market that he could press chocolate manufacturers to raise the prices on chocolate bars if he wanted to. For the last ten years, according to the Telegraph, he has gathered about 15 percent of the world's cocoa stocks. Ward is now worth $55 million.

Ward is planning to start a private equity fund that would invest in infrastructure in Africa as well as schools, farmland, and storage facilities. The trader who started out as a motorcycle dispatch rider is said to bet on rising food prices, as the world population increases. Ward said, "Food will go to a price where it encourages these developments," according to The Telegraph.

Over the last two and a half years, cocoa prices have indeed increased 150 percent, according to the Financial Times. Last week, the price for cocoa was the highest since 1977, going up to $4,177 per metric ton. Source

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Hedge Fund Commute

NY Looking to Tax Hedge Fund Pros Commuting from CT

New York is facing a massive budget deficit, and legislatures are turning to hedge funds to close the $9.2 billion gap in the state budget. Specifically, the state government is looking to tax out-of-towners who commute from Connecticut to New York. These hedge fund professionals would have their income taxed by New York, rather than Connecticut.

“NO TAXATION without representation” is an ideal most Americans rally around. Not so when it comes to hedge funds. Faced with a $9.2 billion state-budget deficit, New York legislators have their eye on hedge-fund managers who work in the state but live elsewhere, in places like Greenwich, Connecticut. They want to tax the profits, or “carried interest”, of the 1,000 or so hedge-fund managers who commute regularly into New York to work (state residents already pay tax on their carried interest). Out-of-state executives at private-equity and venture-capital firms would also be targeted. That would help the state rake in around $50m annually.

The hedge-fund industry is up in arms. If New York’s proposed tax goes through it could double managers’ taxes, opponents say, because other states may continue to tax their carried interest too. Bob Discolo of PineBridge, an investment firm, says the tax “will destroy the New York hedge-fund business.”

Hedge funds are mobile, however, and more likely simply to move their offices out of New York to escape the tax. People who live in New Jersey and Connecticut may decide to bring their work closer to home. Michael Bloomberg, the mayor of New York, has dubbed the proposal “the best thing that ever happened to Connecticut”.Source

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Hedge Funds Commodities Trading

Charity Accuses Traders of Gambling with Lives of the Poor

The World Development Movement has issued a report accusing hedge funds and other financial speculators of gambling with the lives of impoverished people. The charity warns that those trading commodities in recent years could potentially cause major flucuations in the prices of commodities. In recent years the prices of essential commodities such as energy, cocoa and coffee have risen dramatically.

The charity's demands for the British financial watchdog to follow the US in cracking down on such speculation comes against a backdrop of cocoa prices jumping to a 33-year high as it emerged that a London hedge fund had snapped up a large part of the world's stock of beans. On Friday, traders say, Armajaro took delivery of 240,100 tonnes of cocoa – the biggest from London's Liffe exchange in 14 years and equal to about 7% of annual global production, according to the Financial Times.

A 150% rise in cocoa prices over the past 18 months has forced many chocolate-makers to raise their prices and often to use less cocoa.

The WDM's Great Hunger Lottery report says "risky and secretive" financial bets on food prices have exacerbated the effect of poor harvests in recent years. It argues that volatility in food prices has made it harder for producers to plan what to grow, pushed up prices for British consumers and in poorer countries risks sparking civil unrest, like the food riots seen in Mexico and Haiti in 2008. Source

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Hedge Fund of Fund List

Fund of Funds List

Hedge Fund of Funds List in Excel

Part of our team runs the largest hedge fund networking association in the industry and they have just finished updating a new version of our Fund of Funds Directory. This resource was created after our team received dozens of emails from industry professionals looking for lists of fund of funds, digital fund of fund databases, and excel-based hedge fund of fund directories.

This Fund of Funds Directory is Excel-based and provides full contact details of private equity firms including the following information:

Contact names
Job titles
Phone numbers
Email addresses
Physical addresses
Website URLs.

If you are interested in learning more about this resource, getting a sample of our fund of funds list or contacting the creators please see Fund of Funds Directory.com. You may also navigate this same site by following one of the links below:

This list of fund of funds contact details is updated twice a year and when you purchase a copy of it you will get free updates to it for a period of 12 months after your purchase.

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Hedge Fund Start Ups Cayman Islands

100 Cayman Islands Hedge Funds Launch Despite Predictions

Hedge funds in the Cayman Islands have defied expectations that the industry would leave the location. According to a local news resource, there are 9,486 hedge funds operating in the area as of June 30, 2010. This is an increase of over 100 on the previous quarter.

Other good news is that so far this year, authorizations have outstripped terminations each and every month. Ingrid Pierce, partner and head of Walkers' Hedge Fund Group in the Cayman Islands, said clients continue to have the utmost confidence in the Cayman Islands as the domicile of choice when it comes to hedge funds, and despite concerns to the contrary, very few funds have either redomiciled or determined to set up funds elsewhere.
With clients among the world's leading investment managers and financial institutions, Walkers reports a healthy flow of instructions for new funds to be established.

“Recent press commentary has pointed to a preference for new hedge funds to be domiciled in Ireland and Luxembourg at the expense of Cayman, however a more likely scenario is that these jurisdictions will co-exist with the Cayman Islands, each appealing to different if partially overlapping segments within the investor and investment manager communities,” Pierce added. Source

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Hedge Funds Artificial Intelligence

Hedge Funds Increasingly Relying on Artificial Intelligence

Hedge funds are turning more and more to the science of artificial intelligence to choose the best investment play. While traders sometimes repeat the same mistakes, these computers are trained to learn from errors and adapt so as not to make the same error in the future, thus improving its strategy.

With artificial intelligence, programmers don't just set up computers to make decisions in response to certain inputs. They attempt to enable the systems to learn from decisions, and adapt.

Most investors trying the approach are using “machine learning”, a branch of artificial intelligence in which a computer program analyses huge chunks of data and makes predictions about the future. It is used by tech companies such as Google, to match web searches with results, and NetFlix, to predict which movies users are likely to rent.

One upstart in the AI race on Wall Street is Rebellion Research, a tiny New York hedge fund with about $US7 million ($8m) in capital that has been using a machine-learning program it developed to invest in stocks.

Run by a small team of 20-something math and computer whizzes, Rebellion has a solid track record, topping the Standard & Poor's 500-stock index by an average of 10 per cent a year, after fees, since its 2007 launch and up to last June, according to people familiar with the fund. Source

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Hedge Funds Credit Survey

Survey: Hedge Funds See Easing of Credit

Hedge funds and private equity firms have finally marked an easing of credit terms, according to a recent survey. Over the past three months, credit terms have relaxed but remain much tighter than around 2006 and earlier.

Although 65% of senior credit officers who were surveyed by the Federal Reserve said that price terms for credit to private investment firms remained unchanged, 25% said they had loosened somewhat.

For nonprice terms, such as haircuts, covenants and cross-default provisions, 35% said terms had loosened, while 55% said they remained basically unchanged and 10% said they had tightened those terms.

Still, comparing credit terms for private investment firms at the end of 2006 to today, fully 95% of credit officers said terms were considerably or somewhat tighter.

Also, looking forward for the next three months 25% of senior credit officers told the Fed they expected price and nonprice terms for credit to the private investment industry to tighten. Source

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Hedge Funds Apple

Are Hedge Funds Hoping for an Apple Slingshot?Notes

While most investors were let down by the Consumer Reports' recent criticism of Apple's iPhone 4, hedge funds might have been cheering. The report caused a drop in Apple´s shares and hedge funds seem to be looking at this as an opportunity for what one financial columnist calls the Apple Slingshot, where hedge funds are banking on a bounce back in the share price following this buying opportunity.

Monday was the Consumer Reports release so what do the Hedge Fund’s do on Tuesday? They feed the media with stories of a recall, ‘PR experts say an iPhone 4 recall is inevitable!‘ Beyond this kind of hysteria, the truth is that under a worst case scenario Apple would recall the few million iPhone 4’s that have been sold and the problem would be solved. The scope of such a recall for a company with approximately $45 billion in cash is inconsequential. A second alternative to this reception problem would be to re route antenna efficiency by way of a software update. This solution is most likely.

The third alternative would be to include a free bumper cover with each iPhone 4 purchase. As a side note, Apple might be making more money from the $29 bumper than Google makes from its Android OS but that’s for another article on another day. The hedge funds know an iPhone 4 solution is coming but that doesn’t stop them from taking full advantage of the trading action. Everyone selling today is already plotting their re-entry on Thursday, Friday, or Monday ahead of earnings.

If the iPhone 4 was really a flop it would be because consumers genuinely did not like the product and I would tell you to exit the stock because the string of Apple innovation had run its course. That is not the case here. The iPhone 4 is off to the best sales start of any smartphone in history, Apple can’t keep it in stock, and 80 more countries are eagerly anticipating the international launch this fall. Investors should be buying this slingshot dip as the bounce will be fast and furious when it arrives. source

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Hedge Funds Investor Redemptions

Poor Returns May Cause Redemptions from Hedge Funds

Hedge funds´ less than stellar returns over the last six months may cause even more pain for the industry. Analysts in the industry are predicting big redemptions from hedge funds as investors seek stronger returns elsewhere.

May's market tumult likely hurt hedge fund managers again in June and may inflict more pain in July as investors reacted to poor returns by pulling some of their money out, industry consultants forecast.

"We expect to see large outflows in June and July," executives at TrimTabs and BarclayHedge said in their latest report which was released on Monday.

Many hedge funds let their clients take money out only a few times a year and so reaction to the market's sharp drop two months ago could be slow in coming, the consultants said. Source

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Hedge Funds First Half

Hedge Funds Post Fourth-Worst First Half Start

According to Hennessee, hedge funds have posted the fourth-worst first half returns ever. This may speak more of the industry´s history of solid performance than of an outstandingly bad first half of the year considering the industry still returned 0.2%.

Hedge funds had their fourth-worst first half since industry performance-tracking began as Europe's sovereign debt crisis and concern about a slowdown in the global economic recovery hit equity and credit markets, consulting firm Hennessee Group said Monday.

An index of hedge funds run by Hennessee climbed 0.2% in the first half of 2010. The only years with worse performance in the first six months of the year were 2008, 2002, and 1994, the firm noted. Hennessee has been tracking performance in the industry since 1987.

"In 2008, the credit crisis began to unfold in the first half of the year. In 2002, poor performance was due to most hedge funds reducing short portfolios as they attempted to pick the bottom of the dot com bubble," Charles Gradante, co-founder of Hennessee Group, said in a statement. "In 1994, hedge funds experienced losses as rising global interest rates caused bond prices to plunge." Source

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