Global Alpha Tumbles In Feburary

Apr 4 2007 | 12:21pm ET

Has the Cadillac of hedge funds become a lemon?

Goldman Sachs’ once high-flying flagship hedge fund, Global Alpha, took a big hit in February, falling 5.7% while most hedge fund indices showed positive or flat returns. Bad bets on currencies, stocks and global bonds leave the fund, helmed by Mark Carhart and Raymond Iwanowski, down 2% for the year. The fund fell by 9% last year, the first down year in its seven-year history.

“The U.S. equity market-neutral strategy was down for the month,” the managers wrote in their monthly investor update, Bloomberg News reports. “The stocks/bonds/cash-timing strategy detracted from overall performance due to our short position in global bonds.”

The fund also bet against the Japanese yen and Norwegian krone in February, both of which rose about 2% against the dollar. But the decline was limited by bets on rising bond prices in the U.S. and Australia.

“Several of our funds are particularly volatile, as we have strived on behalf of our clients to optimize for capital efficiency,” the update explained. “Because hedge-fund products are complex, we believe no single metric on its own can comprehensively provide an assessment of the risks investors face.”

Returns, by contrast, are unmistakably hard and comprehensive.


In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...