Hedge funds turn in their worst record for nearly 20 years because of credit crunch

Independent- Hedge funds turned in their worst first-half performance in almost two decades because of the credit crunch and the onset of a bear market in stocks.

Hedge funds declined by an average 0.7pc in June, bringing the year-to-date loss to 0.75pc, data compiled by Hedge Fund Research show. It’s the worst start to a year since the Chicago-based firm began tracking returns in 1990. The $1.9trillion (€1.2tn) industry has posted one losing year, in 2002, when funds fell 1.45pc.

"Equity markets have made for an incredibly difficult environment,” said Mark Dampier, an analyst at Hargreaves Lansdown Stockbrokers in Bristol, who tracks the money-management industry.

Managers attracted a net $16.5bn during the first three months of the year, down from $30.4bn in the fourth quarter, Hedge Fund Research reported. Investors have become less tolerant of losses and are shifting assets to traders who have shown they can thrive in turbulent markets, said Antonio Munoz, who runs EIM Management USA in New York, which farms out $15bn to hedge funds.

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