Bloomberg – Assets owned by hedge funds including borrowings may have fallen by 75 percent to a decade- low, with less competition paving the way for better returns, said Blaine Tomlinson, chairman of Financial Risk Management Ltd.

The total book size of assets owned by hedge funds may have declined to $2 trillion, from $8 trillion, he said at the GaimAsia 2009 hedge fund conference in Hong Kong today, reducing the industry to a level last seen a decade ago. Tomlinson founded Financial Risk Management, a London-based fund of funds manager overseeing $10 billion, in 1991.

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New York (HedgeCo.Net) – Hedge funds gained 1.37 percent in March, according to data compiled by the Hennessee Group LLC.  It was a successful month for the equity markets at well, with the S&P advancing 8.54 percent, the NASDAQ climbing 10.94 percent, and the Dow Jones advancing 7.73 percent.

"Hedge funds with a focus on the financial sector may potentially outperform in 2009," said Co-Founder of Hennessee Group Charles Gradante.  "Not only did Citigroup and Bank of America announce a profitable January and February, but the borrowings at the Fed discount window have been steadily declining.  It is possible that the banking crisis of confidence can unwind as quickly as it unfolded."  

According to the data, the long/short equity index advanced 1.6 percent, thanks to programs launched by the U.S. government aimed at helping the banking sector.  The arbitrage/event driven index gained 1.34 percent, with credit opportunities aplenty and many managers increasing stakes in bank debt, high yield and convertible bonds. 

The global macro index saw a steady increase of .74 percent.  The Hennessee Group pointed to the fact that many macro managers posted losses on their short-term Treasuries trade after the Fed announced they would buy $300 billion in U.S. Treasuries, which prompted buying and drove down yields.

This puts the YTD gain for hedge funds at just over 1 percent.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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