HedgeCo.Net

West Palm Beach (HedgeCo.net) - Morningstar presented their monthly analysis of hedge fund performance for November and asset flows through October.

"Hedge funds have a long path to recovery ahead of them," said Hedge Fund Analyst Nadia Papagiannis. "November was a better month than the last two, mostly because hedge funds hoarded cash, but they are still losing money on their investments and facing the ongoing challenge of funding investor redemptions."

Hedge funds slid again in November, as the Morningstar 1000 Hedge Fund Index lost 2.5% for the month and 23.7% year to date. Hedged against the appreciating U.S. dollar, the asset-weighted Morningstar Composite Hedge Fund with MSCI Index fared better dropping only 0.8%. Hedge funds charge performance fees on any new profits earned, but those have been scarce since November 2007.

Compounding the funds’ pain, investors have responded to the lackluster performance by pulling more than $20 billion in October, which accounts for the bulk of the $29 billion withdrawn over the last 12 months from hedge funds.

Hedge funds of funds performed better than multi-strategy hedge funds this month, as the Morningstar Hedge Fund of Funds and the Morningstar Multi-Strategy Hedge Fund Indexes dropped 2.3% and 3.0% respectively.

November returns and October asset flows for the Morningstar Hedge Fund Indexes are based on funds that reported as of Dec. 16, 2008. Returns for the Morningstar Hedge Fund Indexes with MSCI are based on funds that reported November performance as of Dec. 14, 2008.

As announced in September 2008, Morningstar is also now calculating hedge fund indexes by applying the MSCI Hedge Fund Index Methodology and Hedge Fund Classification Standard to Morningstar’s hedge fund database. These indexes demonstrate the performance of hedge funds to investors who have hedged their currency exposure back into U.S. dollars. The MSCI Hedge Fund Index Methodology classifies hedge funds by investment process, geography, and asset class. 

But the news was not all doom and gloom. Once again, the Morningstar Global Trend and Global Non-trend Hedge Fund Indexes performed well, funds in these categories experienced outflows during October, global trend funds saw overall inflows of $9 billion for the first 10 months of the year, more than every other category. Emerging markets fared poorly, as dwindling demand for commodities depressed the equities in commodity-based economies. The Morningstar Emerging Markets Hedge Fund Index lost 5.1% in November.

The Morningstar Developed Asia Hedge Fund Index’s relatively small loss of 0.3% was bolstered by the Bank of Japan’s interest rate cut and stimulus package announcement. The Morningstar Japan with MSCI Hedge Fund Index gained 0.5%. U.S. equity hedge funds performed among the worst this month, small capitalization equities took a beating in November, but most hedge funds hedged, as the Morningstar US Small Cap Equity Hedge Fund Index ended down only 4.6%, as compared to the Russell 2000 Index’s almost 12% decline.

The Morningstar Security Selection with MSCI Hedge Fund Index, with component funds that also take directional bets on equities, lost 2.7%. For the year to date through October, directional Europe and U.S. equity funds experienced significantly more outflows than other categories. Funds that kept a lid on market exposure fared relatively well this month. U.S. Treasuries across the board showed the largest monthly gain in decades amid poor economic data, fears of deflation, and a government plan to buy U.S. mortgage-backed securities. 

The Morningstar 1000 Hedge Fund Index, a global, broadly representative benchmark for hedge fund performance, has return history from January 2003.

Editing by Alex Akesson

Editor for HedgeCo.Net

Email: alex@hedgeco.net

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!

Tags: advisory-services, asian-financial-crisis, bond-markets, boston, composite-index, deephaven-funds, emerging-market, government-bond-index, international-ltd, israel, nouriel-roubini, prison-term, reverse-takeover, star-ratings, tremont-hedge-fund-index, volatility

Washington Observer Reporter – Wall Street’s initial enthusiasm about a $586 billion Chinese stimulus package fizzled Monday, as investors succumbed to anxieties about how U.S. companies will survive a severe pullback in spending.

Stocks got a short-lived boost from China’s plans to boost its economy through a mix of spending, subsidies, looser credit policies and tax cuts. The package could benefit multinational companies with business in China such as General Electric Co. and Caterpillar Inc.

But Wall Street’s optimism quickly waned, as it has tended to do since the mid-September downfall of Lehman Brothers Holdings Inc. and government takeover of the troubled insurance giant American International Group. Market participants realized that while China’s stimulus is a positive sign that governments around the world are working to fix the global economy, the stimulus itself will likely have only a limited effect in the United States.

Read Complete Article

Tags: bain-capital-llc, guardian-unlimited, initial-connection, lehman-brothers-holdings, lehman-brothers-holdings-inc, mortgage-fund, nouriel-roubini, pencil, quarterly-survey, sailfish-capital-partners-llc, treasurys, white-house-spokesman

West Palm Beach (HedgeCo.net) – In a Reuters release today, it is reported that Asian stock markets edged higher, rebounding from a two-year low.

Chinese shares surged on hopes for policies from Beijing to jumpstart growth, though many analysts said it was a long shot. Although world stock markets slid to the lowest since September 2006 on Tuesday, most Asian indexes turned higher as cheap valuations proved irresistible, especially with markets rife with chatter about fiscal stimulus in China.

"Bargain hunters have returned to the market on talks that a rescue package is on the way," said Francis Lun, general manager from Fulbright Securities in Hong Kong. "We are all waiting for a miracle," Lun added.

Despite the sudden turnaround in Asian stocks, apprehension about the earnings outlook was rife, according to Reuters, especially after the Bank of Japan on Tuesday described the world’s second-largest economy as "sluggish" — a term it has not used since the Asian financial crisis a decade ago.

Stephen Green, head of China research with Standard Chartered Bank in Beijing, said that given economic growth is still expected to stay above 8 percent this year and next, it is too early for the government to squeeze its budget to boost growth.

Rather, Beijing should consider relaxing loan quotas to stimulate bank lending to support growth. "It is too early for a fiscal stimulus package, and we should be responsible about calling for one," he said in a research note. "There is still room for monetary policy before we try fiscal policy."

Alex Akesson

Editor for HedgeCo.Net
Email: alex@hedgeco.net

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!

Tags: boston, due-diligence-service, investment-arm, nouriel-roubini, prison-term, santa-monica-california, volatility