Hedge funds Down Under went down alongside their peers from around the world. Australian hedge funds fell 18% last year, according to Australian Fund Monitors, in line with the global decline in hedge fund performance.
The losses were the worst ever by the AFM Hedge Fund Index—which includes 214 Aussie hedge funds.
“Absolute and hedge funds were not immune from the continuing world market chaos,” Chris Gosselin, CEO of AFM, said. “This is the worst market environment we’ve seen in our lifetimes and probably the worst since 1929. Only time and government intervention will tell if we meet or surpass that.”
Real estate hedge funds were the worst performers among Aussie hedge funds, loosing 52.73%, followed by 130/30 funds (down 42.02%) and convertible arbitrage (down 35.68%). Of the 18 strategies tracked by AFM, just six finished 2008 in the black. Volatility hedge funds rose 14.2%, with commodities hedge funds adding 10.89%.
AFM blamed the short-selling restrictions and bans imposed late last year—and still in place in Australia—for much of the losses.
“What was frustrating was the level of criticism of short-selling as a scapegoat for poor management decisions in the banking and corporate sector,” AFM said in a report.