Wednesday, 23 July 2014
Last updated 18 sec ago
Nov 14 2008 | 11:51am ET
As if more evidence of hedge funds’ dire straits were necessary, the Barclay Hedge Fund Index says that hedge funds lost an average of 8.04% last month and 14.44% of their value during the past two months.
“The 'Great Deleveraging' continued in October,” said BarclayHedge founder and president Sol Waksman. “Investors as well as hedge funds and banks continued selling in order to reduce risk exposure in their portfolios and raise cash.”
“The result has been a significant year-to-date drop in equity prices, with U.S. markets down 30%, other developed markets falling 40%, and emerging markets losing as much as 50% of their value.”
The Barclay Emerging Markets Index was down 15.83% in October, and has lost 25.11% in just two months. Convertible arbitrage dropped 12.22%, and has lost 20.45% in September and October. The only successful strategy in 2008 has been short selling as evidenced by the Barclay Equity Short Bias Index gaining another 17.21% last month.
“While equity long bias funds have lost 25% of their value in 2008, equity short bias funds have gained 43%,” said Waksman. “The key factor in 2008 has been which side of the market you trade. It's been tough for traders on the long side, whereas short traders caught a big wave.”
So far this year the Barclay Hedge Fund Index has lost 19.30%, compared with 32.84 per cent for the Standard & Poor’s 500. The Barclay Fund of Funds Index lost 5.21% in October, and is down 17.33% in 2008.
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…