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Globes – Priority Investments Ltd.’s Israeli hedge fund index, Hedge Fund Priority Index (HFPI) fell 0.85% in July, compared with a 4.66% drop by its benchmark, the Tel Aviv 25 Index. However, the Hedge Fund Research Inc. (HFRI) fund weighted composite index fell 2.17% compared with a 0.98% drop by the S&P 500 Index.
During the first half of July, high oil prices continued to trouble the US economy, and weighed down financial stocks, which weakened the dollar against other currencies. The US government bailout of Fannie Mae (NYSE: FNY) and Freddie Mac (NYSE: FRE), plus the restrictions placed on short sellers, contributed to gains in the second half of the month.
Globe and Mail – Black clouds have been building over the hedge fund industry for much of the year, and a storm could break in coming weeks as investors receive their second set of lousy monthly results from funds that are meant to do well in good markets and bad.
A series of challenges, some unrelated to the hedge funds’ investment strategies, have combined to create lower returns and investor redemptions.
Industry experts expect some funds will be forced to close down as clients walk away.
The single biggest problem is performance. The most recent update of Scotia Capital Inc.’s hedge fund index shows the average fund was down 8.6 per cent in July, compared to a 1.74-per-cent decline in the S&P/TSX equity benchmark. Since its inception in 2005, the Scotia Capital hedge fund index averaged a 13.9-per-cent annual gain.
Globe and Mail – GMP Securities enjoyed a solid debut with its new and much-scrutinized hedge fund.
GMP Diversified Alpha Fund, a multi-strategy fund launched last year by the investment dealer, published its first set of performance numbers Thursday as part of the parent income trust’s financial results.
The fund, which is run in part by GMP’s star stock trader and vice chairman Michael Wekerle, posted a 6.2 per cent return over its first three months of operation, a quarterthat ended June 30. The fund has $196-million of assets.
Over the same period, the benchmark Scotia Capital Canadian hedge fund index returned 5.93 per cent over the same period on an equal weighted basis, and 9.93 per cent on an asset weighted basis that puts more emphasis on performance at the larger domestic hedge funds.
GMP’s venture into the hedge fund world has drawn attention on the Street because of Mr. Wekerle’s dual role as both a part of the hedge fund team and head of the dealer’s equity desk.
New York (HedgeCo.Net) – The legal battles that ensued between Ritchie and investors who once tried to force an involuntary bankruptcy upon them are slowing simmering down.
Chicago based Ritchie Capital has dismissed a complaint it brought against Benchmark Plus Management, LLC, an investor in their Multi-Strategy Fund. Benchmark, along with the Sterling Low-Volatility Fund, had originally sought to expose balance sheets and other secretive information when the fund started experiencing declines.
Ritchie Capital filed a suit against the investors following those actions, seeking $5 million in damages and citing a breach of the confidentiality and non-disparagement provisions of the governing documents of the fund.
In April, the involuntary suit was dismissed by a Chicago court, prompting Ritchie to drop their charges and focus on the Multi-Strategy fund, which is not closing according to the company.
“We are pleased that the communication channels between Ritchie and Benchmark Plus have been re-established. Benchmark is supportive of Ritchie Capital’s continued management of the Multi-Strategy Fund and applauds its recent actions of having an independent expert verify the relevant books and records of the Fund,” said Robert Ferguson, Principal of Benchmark Plus. He went on to say that Benchmark has terminated their relationship with their legal counsel, Winston & Strawn, though reasons weren’t stated as to why.
It is estimated that Ritchie is managing approximately $1 billion in assets. Ritchie has not yet dropped their case against Sterling.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Chicago Tribune- Maybe plain-vanilla stock and bond mutual funds will do the job after all.
Long-short funds — the newfangled mutual funds designed to give common investors a hedge fund experience and protection during downturns — recently went through one of their first major tests. And they flopped.
In July and August, with investors concerned over subprime loans and a credit squeeze, the benchmark Standard & Poor’s 500 stock index went down 9.4 percent. Long-short mutual funds — which are designed to hedge risk by betting on some stocks to rise and others to fall — went down 8.4 percent, according to Lipper Inc., a mutual fund tracking firm.
