Hedge Funds Cut Bets
Hedge Funds Cutting Bets After a Tumultuous June
Hedge funds have slashed bets after a very rough trading month in June. Many managers suffered stiff losses last month largely because the market has been so shaky from the high price of oil and especially the Greek debt crisis. Now, it appears that many hedge funds are backing off somewhat risky bets until the market settles down, and with the American economy depending on a debt deal that would prevent default if passed before the beginning of August it's uncertain that July will be any calmer than June.
Hedge funds found few bets -- calling market direction or trying to buy cheap stocks and go short on expensive ones -- worked in a month dominated by worries over Greece's attempts to push through austerity measures needed to secure a bailout.
"It's not been a good month," said one prime broker who asked not to be named. "Some strategies that were a bit crowded -- long commodities, long gold, short dollar -- didn't perform well."
Hedge funds lost 1.6 percent in June, according to Hedge Fund Research's HFRX index, lagging the FTSE 100's 0.7 percent fall.
After losses of 1.2 percent in May, according to the broader HFRI index, it takes losses this year to 2.1 percent, with big names such as Paulson and Moore Capital in negative territory. Source
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