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HedgeCo.net (West Palm Beach) – Long/Short Equity managers who maintained a cautious stance through the recent market run-up appeared to be positioned to profit as markets shifted from cyclicals to defensives in June. Overall, the Credit Suisse/Tremont Hedge Fund Index (“Broad Index”) finished up 0.43% for June, bringing year to date to 7.18%.
Convertible Arbitrage funds continued to post the best performance of all the strategies in the Broad Index, with 4.05% for June and 23.95% cumulative performance YTD, Credit Suisse/Tremont Index’s monthly commentary reported. As equity markets’ recovered in the second quarter, managers began to profit again from the volatility arbitrage aspect of the strategy.
Overall, Emerging Markets finished the month relatively flat despite a rebound in economic activity in Asia, as countries across the region saw rising industrial and manufacturing output, the Index reported.
Credit-oriented hedge funds performed well as credit markets showed healthy activity, with $102 billion of investment grade bonds brought to the market in June. Many believe continued governments’ activism in the markets could provide additional opportunities for these managers.
Global Macro hedge funds posted their first negative monthly performance since October 2008 as the sell-off of short rates in US Treasuries negatively impacted the positions of a number of Global Macro hedge funds early in the month, Credit Suisse/Tremont said.
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Bloomberg – Crude oil was little changed near $60 a barrel in New York amid concerns the global recovery has yet to take root, postponing a rebound in demand for fuel.
Hedge-fund managers and other large speculators reduced their net-long position in New York in the week ended July 7, according to the latest data from regulators. Stocks dropped from Dubai to Taipei and Treasuries rose on speculation that government rescue measures have not taken effect.
“Bearish sentiment in the market is persisting,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “It’s weak, so a move to $58.30 is possible, but we should consolidate around there.”
New York (HedgeCo.Net) – Hedge funds gained 1.37 percent in March, according to data compiled by the Hennessee Group LLC. It was a successful month for the equity markets at well, with the S&P advancing 8.54 percent, the NASDAQ climbing 10.94 percent, and the Dow Jones advancing 7.73 percent.
"Hedge funds with a focus on the financial sector may potentially outperform in 2009," said Co-Founder of Hennessee Group Charles Gradante. "Not only did Citigroup and Bank of America announce a profitable January and February, but the borrowings at the Fed discount window have been steadily declining. It is possible that the banking crisis of confidence can unwind as quickly as it unfolded."
According to the data, the long/short equity index advanced 1.6 percent, thanks to programs launched by the U.S. government aimed at helping the banking sector. The arbitrage/event driven index gained 1.34 percent, with credit opportunities aplenty and many managers increasing stakes in bank debt, high yield and convertible bonds.
The global macro index saw a steady increase of .74 percent. The Hennessee Group pointed to the fact that many macro managers posted losses on their short-term Treasuries trade after the Fed announced they would buy $300 billion in U.S. Treasuries, which prompted buying and drove down yields.
This puts the YTD gain for hedge funds at just over 1 percent.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Bloomberg – Global Tactical Trust, a hedge fund run out of Australia by Boston-based Grantham Mayo Van Otterloo & Co., is betting the recent rally in stocks will end, and is avoiding high-risk investments.
The hedge fund that invests based on global economic trends returned 13 percent last year, when the industry posted average declines of 19 percent, by wagering against equities and backing bonds. Managed by Jason Halliwell, the fund is long the U.S. dollar, yen, U.S. Treasuries and gold, expecting them to rise, while remaining neutral on equities.
Seekingalpha.com – As more investment pros warn of a bubble in Treasuries, State Street Global Advisors is launching an intermediate-term bond exchange-traded fund focused on investment-grade corporates and government debt.
The SPDR Barclays Capital Intermediate Term Credit Bond ETF started trading on Wednesday. It’s expected to come with an annual expense ratio of 0.15%. It will follow an index of more than 2,500 bonds and a weighted maturity of 5.2 years.
While ITR enters an investment-grade intermediate bond field with a few established competitors, the new ETF does track an index that offers somewhat different investment features than its rivals.
Gold Seek – This January was one of the worst on record for financial markets. US Treasuries crashed after enjoying a recession-beating run in 2008. Gold and silver were the only major asset class to end the month higher.
Hedge funds that previously ignored precious metals have become converts, with hedge fund star Greenlight Capital buying the yellow metal for the first time.
Another money manager Osmium Capital Management is offering a hedge fund priced in ounces of gold to protect it from exchange rate fluctuations. Subscriptions are in dollars, euros or pounds and then converted into gold.
Business Standard – Tatas’ voting powers in Bermuda-based hotel firm to rise if shareholders approve reclassification of shares.
The Tata group-controlled Indian Hotels Company’s voting power in Orient Express Hotels (OEH) will increase if the shareholders vote for annulling the powers of its class B shares.
This, if it goes through, will be beneficial for Indian Hotels, which had earlier made unsuccessful attempts to increase stake in the Bermuda-based luxury hotel chain.
OEH has convened a shareholder’s meeting on October 10 to get shareholders’ approval. The directors of OEH, who hold 81.2 per cent voting rights, have asked shareholders to “vote against the resolutions as these are contrary to the best interests of the company” in a statement issued in Bermuda.
