Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
HedgeCo.net (West Palm Beach) – Long/Short Equity hedge funds continued to increase overall net exposures in July, enabling managers to capitalize on market upswings early in the month, according to Jordan Drachman, Head of Research for Alternative Beta Strategies at Credit Suisse.
Dr. Drachman noted, ”As risk appetite returns to the market, many Long/Short Equity hedge fund managers have increased their overall net exposures, which enabled them to generate positive returns as equity markets bounced back early in July. Despite mid-month volatility, managers were able to preserve gains to finish up for the month. The Credit Suisse Long/Short Equity Replication Index was up 1.96% (net) for the month, while the Credit Suisse Global Macro Replication Index finished up 0.03% over the same period.”
AIR Indices seek to replicate the performance of major hedge fund strategies and enable investors to gain liquid, transparent insight into the Global Macro and Long/Short Equity sectors of the Credit Suisse/Tremont Hedge Fund Index. The AIR platform also offers inverse indices that seek to approximate short exposure to the aggregate returns of the universe of Long/Short Equity and Global Macro hedge fund managers.
Performances for the AIR Global Macro and Long/Short Equity Indices are calculated daily and shown net of a 1.15% per annum calculation fee.
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HedgeCo.net (West Palm Beach) – One of the first no-load, open-end mutual funds designed to replicate broad-based hedge fund performance characteristics, the ‘IQ ALPHA Hedge Strategy Fund’ (IQHIX) has marked its one-year anniversary on June 30th, 2009.
For the trailing 12-month period, the fund was down -2.58 percent, compared to a loss of -26.21 percent for the S&P 500.
“The performance over the past year can be attributed to a number of factors, including the ability of the fund to hold both long and short positions, and the liquidity of the ETFs used to represent asset class exposures,” said Adam Patti, IndexIQ’s Chief Executive Officer. “As a result, we were able to continuously execute our strategy during the period, something not all hedge funds could do.”
The fund works by optimizing the relative index weights among six hedge fund strategies, Equity Long/Short; Global Macro; Emerging Markets; Fixed Income Arbitrage; Equity Market Neutral; and Event Driven.
The funds do not invest in hedge funds, but use ETFs and a variety of other highly liquid financial instruments to provide exposure to the components of the index in approximately the same weighting. It employs leverage totaling 25 percent of the portfolio to magnify returns.
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CNN Money – AQR Capital Management LLC, among the world’s largest hedge fund managers, will introduce another hedge fund-style mutual fund next month, as it expands its reach beyond the biggest investors.
Greenwich, Connecticut-based AQR, a $20 billion firm led by former Goldman Sachs Group Inc star Cliff Asness, led a new wave of hedge funds marketing to the masses when it launched the AQR Diversified Arbitrage Fund in January.
"We, in about two weeks, expect to introduce a whole new series of style exposures for retail investors," AQR co-founder David Kabiller told Reuters in a rare interview.
West Palm Beach (HedgeCo.net) – Hedge fund adviser, Hennessee Group LLC, announced that the Hennessee Hedge Fund Index advanced +3.84% in April (+5.02% YTD).
“April continued to be a challenging environment for hedge funds, as the market rally was driven by short covering and momentum, rather than changes in fundamentals,” commented Charles Gradante, Co-Founder of Hennessee Group. “While we have seen some improvement in data (most typically that the rate of deterioration is slowing), most funds remain conservatively positioned. Funds are cautious and will wait for fundamentals to improve before significantly expanding their net exposures.”
“Hedge funds underperformed again in April, but have still outperformed year to date. Volatility remains elevated with the S&P 500 experiencing a gain or loss greater than 8% each month this year,” said Lee Hennessee , Managing Principal of Hennessee Group . “Last year hedge funds did a good job of protecting capital, so they don’t need a huge rally to reach a new high water mark. Equity markets would need to double from current levels to reach their previous high.”
Alex Akesson
Editor for HedgeCo.Net Email: alex@hedgeco.net
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West Palm Beach (HedgeCo.net) – March was a challenging month for hedge funds, which entered the month with tight net exposures, according to research by hedge fund consultant Hennessee LLC.
Technology and healthcare/biotech were bright spots for hedge funds, as these sectors were relative outperformers. While the strong equity rally did cause short squeezes, most hedge fund managers expect short portfolios to generate profits in the near term.
The Hennessee Hedge Fund Index advanced +1.37% in March (+1.09% YTD), while the S&P 500 advanced +8.54% (-11.67% YTD).
“Most funds were caught with tight net exposures and were unable to participate in the rally," Charles Gradante, Co-Founder of Hennessee Group said, "Managers were also hurt as the sectors they have been heavily short, such as financials, consumer discretionary and materials, were the sectors that rallied the strongest.”
“Despite the underperformance in March relative to the equity benchmarks, hedge funds are still outperforming for the year,” said Lee Hennessee , Managing Principal of Hennessee Group. “We expect that we will continue to see volatility throughout the year.”
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Reuters – Pension funds will likely funnel more money into hedge funds and become a powerful engine of growth for the industry in the coming months, a hedge fund industry veteran said on Wednesday.
"We are finding that corporate pension funds are looking at hedge funds for allocations for their equity exposures, said Carrie McCabe, chief executive of Lasair Capital LLC, a firm that creates portfolios of hedge funds for clients.
McCabe, who cemented her reputation in the hedge fund industry while running Blackstone Alternative Asset Management and FRM Americas, described a real urgency to pension funds’ desire to beef up their returns with hedge funds in a hurry.
AFP – Is it more painful to see the value of your fund disappear as the global economy crumbles, or for another man to punch you as hard as he can in the face?
For Elliot "The Machine Gun" Odell, a 32-year-old Briton working in the hedge fund industry in Hong Kong, the chance to find out was irresistible.
Odell, whose fierce-looking arms are plastered with tattoos normally hidden under his three-piece bespoke suit, was one of a dozen finance workers who recently bashed their way through "Hedge Fund Fight Nite," a charity boxing match.
After five months of training, he was left in little doubt about how easy it was to escape the whirl of the current market turmoil spooking the world’s financial markets.
"Boxing is pretty much the most stress-relieving thing you can do," said Odell, in his strong Essex accent.
Hedge Funds Review Magazine – Hedge funds generally are more correlated in bull market runs and more de-correlation at market downturns. A comparison of the Credit Suisse/Tremont Broad Benchmark Index (HEDG), an asset-weighted broad benchmark of the hedge fund industry, to the MSCI World Index, a broad equity index, shows that the 12-month rolling correlation between the two has dropped from its peak of 0.97 in June 2006 to 0.61 in June 2008. The findings are given in a research report* by Credit Suisse Index. The report showed that during times of market stress sharp declines from HEDG’s previous peak levels of positive correlation with MSCI World demonstrated the ability to de-correlate from broad equity market indices.
Between July 2007 and June 2008, HEDG increased by 4.09% compared with a fall of 12.5% in the MSCI World Index and a decrease of 13% in the S&P 500.
The ability of hedge funds to maintain exposure to a range of asset classes allows them to preserve capital in down markets and, if successful, offer a more balanced investment option compared to traditional equity indices. In addition, the ability of hedge funds to monetise negative views through short selling is clearly effective during market downturns.
