Reuters – In a period when volatile markets battered most hedge funds, global macro funds are proving their worth, Graham Capital Chairman Kenneth Tropin told Reuters.

During one of the hedge fund industry’s worst years, Graham delivered gains of up to 41 percent in 2008 by making good bets on currencies, stocks, interest rates and commodities. And because the firm invests in highly liquid futures, clients had monthly access to cash even as many funds blocked withdrawals.

The combination of liquidity and returns that are independent of the broader market could revive interest in global macro funds, Tropin said.

"For a long time there was a perception that the biggest returns, the best risk-adjusted returns, were in other strategies. Then we had a market environment last year where most hedge fund styles ended up being correlated to each other and to the equity markets as well," he said.

Graham manages $4.9 billion in assets in human-directed funds and computer-driven quantitative funds. Funds in both categories invest across fixed income, currency, commodity and equity futures.

"Our style of investing offers some benefits, including liquidity and diversification, that may have not been appreciated as much as they should be," he said.

Graham’s quant funds gained from 20 percent to 41 percent last year, while human-directed funds rose by 6 to 27 percent. By comparison, the average hedge fund lost 28 percent.

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Tags: bets, commodities, commodity, diversification, fixed income, futures, global macro, interest rates, liquidity, market environment, perception, quant funds, quantitative funds, reuters, risk adjusted returns, tropin, volatile-markets, withdrawals

Javno – Last week, New York University and Carnegie Mellon sent a new class of math whizzes out into a profession that is both blamed for the financial collapse and charged with preventing it happening again.

Many of these so-called quantitative analysts, or "quants," graduating from elite financial engineering courses will end up writing computer programs that handle an ever greater share of market trading.

Because some of their mathematical models failed to take into account factors that later turned out to be crucial, quants have been blamed for compounding risk and exacerbating the crash in financial markets.

But far from going into decline, those with financial engineering degrees are still in demand as hedge funds and banks seek ways to measure previously unforeseen risks and factor them into their models.

The profession’s reputation took a beating in August 2007, when some quant funds — which try to beat the market by crunching vast amounts of data at lightning speed — lost a third of their value in a matter of days.

Many blamed the math commandos for failing to factor in extreme events, in this case unprecedented numbers of home mortgage foreclosures.

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Tags: account factors, carnegie mellon, commandos, computer programs, engineering courses, extreme events, financial collapse, financial engineering, financial-markets, home mortgage, lightning speed, math whizzes, mathematical-models, mortgage foreclosures, new-york-university, quant funds, quantitative analysts, unforeseen risks, unprecedented numbers