Monday, 28 July 2014
Last updated 2 hours ago
Jul 8 2008 | 10:31am ET
Hedge fund managers around the world responded to last year's difficult market conditions by lowering their leverage and moving a significant share of their assets into cash.
According to a new study by Greenwich Associates and Global Custodian, the proportion of hedge fund managers earning double-digit investment returns dropped dramatically from 2006 to 2007, with the biggest falloff occurring among funds focused on fixed income. With industry-wide performance on the decline, the hedge funds participating in this year's study reported holding fully 15% of their assets in cash at the beginning of 2008.
Cash levels were slightly higher among hedge funds in Asia (17%) and Europe (16%). Equity-oriented funds had 14% of their assets in cash, and fixed income-focused funds had 17%. Among the world's biggest hedge funds, nearly 12% of assets were invested in cash.
Meanwhile, hedge fund industry leverage ratios declined to about 2.1 at the end of 2007 from 2.3 a year earlier, according to the study. Overall gross leverage ratios for fixed income-oriented funds declined to an average of approximately 3.0 at the end of 2007 from 3.4 last year.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…