Reuters- Hedge fund portfolios run by computers are supposed to deliver better results than those managed by humans, but that didn’t happen last month when both types of funds lost money, managerssaid and new data show.
Many hedge fund managers who actively make investments have already sent apologetic letters to investors acknowledging they made mistakes in the last weeks when problems with subprime mortgages spread and pulled global stock markets lower.
Now it is the computer’s turn to say that things didn’t work out for it, or its investors, either.
“Thus far the emergence of such trends in other financial markets continues to be short-lived and filled with extreme price volatility,” Kenneth Webster, president of hedge fund John W. Henry & Co. said, explaining why most of the firm’s funds reported more losses in August.
The firm’s funds were caught off guard when the Federal Reserve cut its discount rate in August, Webster said noting: “JWH programs experienced losses as they systematically exited positions in the British pound and the euro on strong downward spikes, only to see both currencies immediately rally higher after the Fed rate change announcement.”
