Barclays Quant Hedge Fund Dodges Bullet

Aug 14 2007 | 8:40am ET

Barclays Global Investors is expected to give investors in one of its quantitative hedge funds good news today: The fund is down in August, but only a bit.

Compared to many of its fellow quantitative hedge funds, the 32 Capital Fund is only slightly in the red: Dow Jones Newswires reports that the fund’s losses are in the single digits. The fund is now flat year-to-date, which also compares quite favorably to quantitative funds run by AQR Capital Management, Goldman Sachs, Man Group and Tykhe Capital.

BGI is set to give 32 Capital investors a weekly update tomorrow. The Wall Street Journal reports that, unlike other hard-hit quant funds, it hasn’t faced an avalanche of redemption requests. The Journal also said the firm had enjoyed something of an upswing on Thursday and Friday of last week.

“The events of the market are liquidity-driven rather than market-driven,” a BGI spokesman said. “There are no fundamental changes to the market. We are maintaining the investment process that we have.”

But BGI’s parent, Barclays, may not be quite so lucky. Bloomberg News reports the bank may have “significant” risks from its loans to hedge and private equity funds.

“We think there is a material risk that some of Barclays Capital’s counterparties may be in trouble,” Panmure Gordon analyst Sandy Chen told Bloomberg. “What was previously a source of growth could turn into an area of weakness.”

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