Independent – Man Group, the world’s largest quoted hedge fund manager, fuelled fears yesterday that some of its smaller competitors may be in serious trouble after revealing that some of its futures funds have made substantial losses this month.
The disclosure prompted speculation in the market that some smaller hedge funds may be suffering even greater losses and could be forced to unwind highly leveraged positions, causing share prices to spiral lower.
The news came as the FTSE 100 dropped another 91.6 points, closing down 1.6 per cent and reversing more than half the gains it made on Tuesday after Monday’s plunge in shares.
Anthony Bolton, Fidelity’s highly respected fund manager, yesterday warned the stock market “correction could take months rather days”. Speaking at the Securities and Investment Institute Mr Bolton said: “I think it could be the end of the bull market”.
Man Group confirmed that its flagship Man AHL Diversified Futures fund lost 3.7 per cent last week alone, and had dropped4.5 per cent so far this month. However, it is still showing a net gain of 31.9 per cent in the year so far. Shares in Man Group, one of the best blue-chip performers this year, closed at 2,195p, a fall of 16p.
A hedge fund analyst, who declined to be named, said Man’s poor performance should be viewed as a short-term movement due to volatile equity markets, but also warned investors to expect a bumpy ride over the summer. “This is a managed futures fund, and this sort of fall, while it does not happen every week, does happen from time to time. The AHL fund has certainly seen fluctuations like this before but the market has clearly absorbed this news pretty well,” he said.
