Reuters – Hedge funds around the world extended their losses last month when the average portfolio declined 1.41 percent amid fresh stock market turmoil, data released on Friday shows.

The average hedge fund lost 17.70 percent in the first 11 months of 2008, figures from Hedge Fund Research show.

These numbers mark the worst-ever returns in an industry that once wooed investors with promises of strong returns in all market conditions and whose only unprofitable year was 2002, when the HFRI index lost 1.45 percent and the S&P 500 dropped 23 percent.

Read Complete Article

Tags: blue-jays, fellow-shareholders, investment-arm, losers, medallion, money, newcastle, permal, trillion

Reuters – Wealthy investors are cutting back exposure to hedge funds after disappointing returns but are not exiting the sector wholesale, and are likely to come back again once markets have calmed down.

High net worth individuals have been key drivers of the rapid growth of the $2.6 trillion industry. Many invested in free-wheeling portfolios well before institutions such as pension funds decided to go in.

But a dire year of performance is presenting hedge funds with their greatest-ever test — Hedge Fund Research’s HFRI index fell 4.68 percent in September, its second worst month ever, taking the year-to-date loss to 9.41 percent.

Still, given the battering equity markets have taken — the FTSE 100 .FTSE fell 24 percent in the nine months to end-September and has since fallen further — wealth managers say they are not deserting the asset class completely.

Read Complete Article

Tags: allegations, asian-strategy, citigroup-global-markets, federal-reserve, fourth-quarter, investment-arm, merrill-lynch, money, msci, permal, portfolio-managers, research-capabilities, top-quality, turbulent-financial-markets