Global Alpha Keeps Sinking

May 30 2007 | 10:57am ET

The hard times for Goldman Sachs’ flagship Global Alpha hedge fund continue in the early going this year. According to a report sent to its investors, the fund is down 3.4% in the first four months of 2007; it is down some 12% over the past 16 months, a period when the Standard and Poor’s 500 Index has jumped some 22%.

As in February, when the fund was down just 2% on the year, its managers, Mark Carhart and Raymond Iwanowski, blamed bad bets on currencies for the downturn, and added that returns were hurt by market-neutral fixed-income and equity investments, which “detracted from performance as our earnings quality and valuation themes performed badly,” they wrote in the letter, a copy of which was obtained by Bloomberg News.

The fund had bet that the Canadian dollar and Norwegian krone would decline; both rallied against the dollar in April.

On the bright side, the fund may have turned a corner, rising 0.4% in April, thanks to buoyant global equity markets and metal prices.


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Editor's Note