Many Hedge Funds Still Below High-Water Marks

Oct 29 2010 | 1:49am ET

The average hedge fund may have finally crested its high-water mark, but according to one report, little more than half of hedge funds are average or above.

Despite two years of positive performance, 45% of U.S. hedge fund firms have at least one fund that is still below its high-water marks. In Europe and Asia, it's even worse, with 50% of firms reporting at least one fund below its pre-financial crisis peak, according to Greenwich Associates.

The report come as several high-profile hedge fund indices announced that they had reached their own high-water marks. Most hedge funds cannot begin charging performance fees again until previous losses have been recouped, although some reset after as little as one year.

More than half of U.S. hedge funds and between 35% and 40% of Asian and European hedge funds say they added 20% or more in the 12 months ended March, with 90% enjoying positive returns.

"The facts 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," Greenwich's John Feng wrote.

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