logo
  Join        Login             Stock Quote

Recovering From the 2011 Shock Is Proving Difficult for Hedge Funds

 November 23, 2012 12:22 PM


Some may find this a bit surprising. The magnitude of losses experienced by hedge funds on average during the height of the Eurozone crisis in 2011 was as large as the losses the industry witnessed during the financial crisis in 2008.

"CORE" = The Dow Jones Credit Suisse Core Hedge Fund Index; "TR" = total return (source: CS/DJ)

[Related -Gold Stalls into $1,200 Target with Trade Planning]

But unlike the performance after the financial crisis, the industry has been unable to shake the 2011 losses. Since the 2011 shock, hedge funds have been trending sideways for over a year now. Managers continue to find it extremely difficult to position themselves in response to the Eurozone madness. Many became short the various risk markets (or went into cash) this past summer and got hurt by Draghi's action in late July (see discussion).

Numerous funds got involved in sovereign CDS - long protection - and took losses as CDS tightened (see discussion). Being short going into QE3 did not help either. Also a number of equity funds got hurt by a sharp sell-off in technology recently. The declines in commodities and emerging markets earlier in the year caused some funds to underperform as well.

[Related -Has Warren Buffett Found The Best Investment In Oil?]

The groups that did well have been some of the more specialized managers such as the Nile Pan Africa Fund (up 35% YTD) or DAFNA Lifescience (up 49%). But with yields at historical lows and macro risks still lurking, generating consistent returns (after high fees) has became extraordinarily tough for the industry as a whole.

Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageHas Warren Buffett Found The Best Investment In Oil?

Shares of oil stocks plunged again as the price of West Texas Intermediate wiped out nearly half of its read on...

article imageDemand For Safe-Haven Bonds Surged Last Week

The crowd piled into investment-grade bonds last week as economic worries triggered an exodus out of risky read on...

article imageThoughts on MetLife and AIG

In some ways, this is a boring time in insurance investing.  A lot of companies seem cheap on a book and/or read on...

article imageA 2016 Recession Would Be Different

If the US or the Eurozone entered a recession this year, a few macroeconomic variables would look very read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

The Return Of Crisis
More Articles on: Finance , Business Services , Europe



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.