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West Palm Beach (HedgeCo.net) - In the monthly report from Dow Jones Indexes on the performance of Hedge Fund Strategy Benchmarks, only one of four strategies, merger arbitrage, posted net-of-fee gains in November.
After hedge funds experienced two of the most volatile months in market history, merger arbitrage emerged with a small positive net-of-fee gain in November, returning 0.15%. The small gain held YTD performance for merger arbitrage at approximately the same level as last month, down about -9%.
Convertible arbitrage was hit the hardest with a loss of -4.80%, followed by event driven and distressed securities, which were down -6.35% and -7.47%, respectively, for November.
The equity market neutral and equity long/short benchmarks were suspended at the start of the month as a result of the temporary risk mitigation measures taken by the investment manager of the managed account platform that supports the Dow Jones Hedge Fund Strategy Benchmarks. It has not been determined when calculation of these benchmarks will resume.
On a float-adjusted basis, the Dow Jones Wilshire 5000, the only broad measure of the domestic equity market, lost -8% (-8.15% on a full-cap basis) in November decreasing its YTD return to -38.30% (-38.37% on a full-cap basis).
The fixed income asset class, as measured by the Dow Jones Corporate Bond Index was up 4.88% this month and its cumulative return is down -5.99% for the year. Finally, the Dow Jones Wilshire Global Index, the broadest measure of global equity market, lost -6.73% for the month decreasing its YTD return to -44.68% for 2008.
November 2008 figures for the Dow Jones Hedge Fund Strategy Benchmarks are based on daily estimates net of fees.
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New York (HedgeCo.Net) – Following in the footsteps of other large hedge funds trying to weather the credit crunch, Blue Mountain Capital Management has suspended withdraws on its $3.1 billion fund.
The Blue Mountain Credit Alternatives Fund lost a little over 2 percent in October, while posting admirable returns the rest of the year. The firm decided to halt redemptions hoping they won’t have to sell assets in the current falling credit markets.
“We are not comfortable with this state of affairs,” Feldstein wrote in a letter to investors obtained by Bloomberg News. “If we were to unwind or sell positions to meet current redemptions, the severe liquidation costs would be borne inequitably by the remaining investors.”
The move comes as a shock to some, since the Credit Alternatives Fund has posted an average return of over 45 percent since its inception in 2003. The firm’s other funds aren’t faring too bad either, with its $1.1 billion equity alternatives fund losing only 0.9 percent and its $400 million BlueCorr Fund boasting returns of 21.3 percent, according to the letter. Hedge funds as a whole have had their worst year ever, losing 20 percent according to the Chicago-based HFRX Global Index.
Investors were given until November 10 to decide whether they wanted to redeem their current investment or exchange it for any one or more of three share classes. If they choose to stay, the lock up provisions of the fund will be waived.
For an industry that was once thought to manage close to $3 trillion in the beginning of 2008, assets are falling off sharply according to an estimate by Morgan Stanley, who says that number might drop to $1.3 trillion.
Fears of liquidity crunches have forced investors to rush to redeem their cash, causing several notable funds to freeze up capital this year. Last week, Deephaven Capital Management froze their $1.6 billion fund after investors rushed to withdraw 30 percent of their capital. Meanwhile, RAB took a more drastic route, opting for a three year lock-up in their Special Situations Fund after losing half of its value this year.
“This level of redemptions in the current market environment forces the question of whether such redemptions can be processed in the ordinary course without disadvantaging both continuing and later redeeming investors,” explained Deephaven CEO Colin Smith in his letter to investors.
It is unclear how long Blue Mountain Capital plans on restricting access to redemptions. The company manages an estimated $5.5 billion from locations in New York and London.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Bloomberg – Harry Tyser, manager of the $100 million New Star Firefly Hedge Fund in London, was still trading while being wheeled into the operating room for kidney- stone surgery.
“It’s life and death out there right now,” said Tyser, 40, who used his mobile phone to call in sales before his July procedure. “You need to keep moving your feet in markets like this. There are moments in life to make money and moments where the secret is just not to lose it.”
Tyser’s fund, which bets on rising and falling stocks, returned 3.7 percent last month, according to investors. Few rivals were as fortunate as the average hedge fund fell 6.9 percent, the biggest one-month loss in a decade, according to Hedge Fund Research Inc.’s HFRX Global Index.
Managers who did post profits last month include John Horseman, whose $3.2 billion Horseman Global stock fund rose 5.7 percent, bringing the gain this year to 15 percent, investors said. Carol Brown, a spokeswoman for Horseman Capital Management LP in London, declined to comment.
West Palm Beach (HedgeCo.net) – TriAlpha recently a launched property hedge fund of hedge funds, the TriAlpha Global Property Strategy Fund in June this year.
The fund seeks absolute returns by focusing on hedge fund managers that specialise in the global property sector. In its first month the fund outperformed the FTSE EPRA Global Index by an estimated 11%. Included in the portfolio are recognised names such as Credit Suisse, Thames River and New Star Property hedge funds. Minimum investment for the TriAlpha Global Property Strategy Fund is $5 million (or equivalent).
“We are already seeing a high level of interest in the TriAlpha Global Property Strategy Fund and by having the fund available through Transact we are broadening the availability of this exciting new offering,” commented Cobus Kruger, director at TriAlpha.
Trialpha’s five sub funds of the ‘TriAlpha Alternative Strategy Unit Trust’ have been also approved as restricted recognised schemes for distribution in Singapore.
"With our roots in Stonehage (our private wealth management parent company,) we have extensive experience in dealing with and providing investment solutions to private clients." Cobus Kruger, Director at TriAlpha, says, "Our hedge fund of funds products have been received well by these clients, fitting in neatly with their investment objectives and risk profiles. With increasing numbers of private banks in Singapore we believe that our hedge fund of funds products will be an appropriate solution for their clients."
The five absolute return funds offer investors a variety of risk profiles and investment strategies, the ‘TriAlpha Relative Value Fund’, which invests in market-neutral, multi-strategy event driven, multi-strategy arbitrage and option arbitrage; aims to achieve stable, absolute returns with volatility similar to the Citigroup World Government Bond Index.
The ‘TriAlpha Multi Strategy Fund’ invests across Asia, European and U.S. hedge strategies, emerging markets, macro, event driven and arbitrage; aims to offer stable, absolute returns with volatility similar to the Citigroup World Government Bond Index.
The ‘TriAlpha Growth Strategy Fund’, which invests in Asia, European and US hedge strategies as well as emerging markets and macro hedge funds with a smaller exposure to arbitrage strategies than the Multi Strategy fund; looks to achieve absolute returns with lower volatility than the MSCI World Equity Index.
The ‘TriAlpha Hedge Equity Fund’ which invests in Asia, European and US hedge strategies; offers investors absolute returns with lower volatility than the MSCI World Equity Index.
And finaly, the ‘TriAlpha Global Property Strategy Fund’ will focus on hedge fund managers that specialise in the global property sector.
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