New York Post- Hedge-fund executives say the next blow to hammer their industry will likely come from a wave of hedge-fund redemptions driven by highly-levered funds that invest in other hedge funds.
One bellwether of how this may play out in coming months can be seen in the performance of two key European-hedge funds that have sustained sharp losses because of their exposure to some of the most problematic investment strategies in this summer’s hedge-fund sell-off.
Fix Asset Management’s Canary Fund Ltd. and Fairfax Fund Ltd. – each of which have $3.5 billion under management – have suffered a brutal three months.
Their fund-of-fund portfolios have dropped between 16 percent and 18 percent between June and August.
A fund-of-fund invests capital across a series of hedge funds on behalf of pension funds and endowments.
