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Globe and Mail - Hedge fund manager Ravi Sood is having a rough time navigating through the tsunami that has hit stock markets around the world.
The stellar record of his Lawrence Partners Fund suffered a 48-per-cent hair cut in September, sending its year-to-date loss to 53 per cent for the first nine months of 2008.
Mr. Sood would not comment about his fund, but told investors in a letter that he was forced to "reduce the size of core positions at inopportune levels in midmonth. …
"We cannot restore all of this year’s loss to date in the next few months or quarters, but we are confident we will get there," said the president of Toronto’s Lawrence Asset Management Inc.
Mr. Sood would not comment about his fund, but told investors in a letter that he was forced to "reduce the size of core positions at inopportune levels in midmonth. …
"We cannot restore all of this year’s loss to date in the next few months or quarters, but we are confident we will get there," said the president of Toronto’s Lawrence Asset Management Inc.
Reuters - Union Bancaire Privee has cut its exposure to hedge funds and industry performance has disappointed, while other assets look more attractively-priced, a top executive said.
Christophe Bernard, the Swiss-based firm’s head of asset management, also told the Reuters Wealth Management Summit that the industry, estimated at $2.6 trillion, could shrink by one-third over the coming quarters as investors withdraw assets.
"The extent of what’s happening this year is unseen in the industry," he said, adding the industry’s problems are more drawn out than during 1998’s demise of Long Term Capital Management and Russian crisis or losses it sustained in 2001 and 2002.
"Hedge funds are meant to produce absolute returns. If we say nothing happens (by the end of the year) it will be down 10-11 percent. The basic function of hedge funds will have failed."
A new report released Monday by HedgeFund.net estimates the assets under management by hedge funds have reached nearly $3 trillion.
According to the report, hedge fund assets increased 4.41 percent last quarter, in spite of rough equity markets, to reach $2.973 trillion. The report combined data from a bi-annual survey of hedge fund administrators and information from HedgeFund.net’s database of more than 8,400 funds.
Peter Laurelli, vice president of Channel Capital Group which owns HedgeFund.net, said hedge fund assets will probably top $3 trillion sometime in the next couple of quarters, depending on performance.
Fund performance accounted for $91.28 billion being added to hedge funds last quarter, while investors placed an additional $34.21 billion in new assets with hedge funds. One dark spot for the industry was that liquidations of funds last quarter exceeded assets in newly established funds by $8.52 billion. Second quarter saw the third-highest level of hedge fund closures on record.
"It’s a natural evolution of the industry if you have funds that are not performing well," Laurelli said. "When you go through a period like we’ve had where there have been some large losses in the industry, you’re going to have fund closures. That doesn’t mean that the industry is contracting, it just means that there is some turnover."
Times Online- Citigroup is to close an $800 million hedge fund co-founded by its chief executive Vikram Pandit, following bad returns and the loss of top managers.
The US investment bank will now buy what is left of Old Lane Partners’ assets and be forced to further write down the value of the fund in the second quarter, The Wall Street Journal reports. In the first quarter Citigroup wrote down the value of the fund by $202 million to reflect investor redemptions.
Old Lane’s closure is the latest blow for Citigroup, which has struggled with sub-prime mortgage related losses, losing nearly $15 billion in the last two quarters, forcing it to cut jobs and sell businesses.
Bloomberg- Whenever pension funds, mutual funds and insurance companies decide they should own dollar assets that are out of favor with hedge funds, the hedge funds lose.
Institutional investors bought more dollars than they’ve sold this year, according to State Street Corp. and Bank of New York Mellon Corp., the largest money managers for institutions. That’s significant because speculators such as hedge funds raised bets against the greenback by 36 percent, data from the Commodity Futures Trading Commission in Washington show.
History indicates institutional investors may be on to something. The dollar gained in 71 percent of the quarters over the past decade when they were net buyers, according to Boston- based State Street.