'If all the nations in the world are in debt, where did all the money go?'
- Steven Wright
Performance
Hedge funds as measured by the Greenwich Global Hedge Fund Index ("GGHFI") advanced during the month of March and moved into positive territory for the year. The GGHFI returned 1.50% while the Greenwich Composite Investable Index ("GI2") declined 3.17% during the month, compared with global equity returns in the S&P 500 Total Return 8.76%, MSCI World Equity 7.24%, and FTSE 100 2.51% equity indices. Sixty percent of constituent funds in the GGHFI ended the month with gains.
The majority of hedge funds were able to move up with equity markets during the month of March. Most managers tracked in our index are now positive on the year and continue to capitalize on market volatility. Market Neutral funds turned in another excellent month in March, with funds gaining 0.85% on average and eight of nine sub-strategies showing positive returns. Convertible Arbitrage managers continued their success in 2009 with a gain of 2.92% in March, bringing their YTD performance to nearly +10%. Event Driven managers also contributed to the gains in the strategy group, netting 1.77% on average. Special Situations managers were the best performing sub-group among these funds, climbing 2.50%, while Distressed funds also advanced by 1.80%. The only Market Neutral managers who declined during the month were Other Arbitrage funds, falling by 1.74%.
Long/Short Equity managers were the second best hedge fund strategy group in March, returning 2.45% on the strength of surging global equity markets. Value managers outshined Growth funds during the month, with both advancing 3.29% and 2.69%, respectively. Short sellers suffered a difficult month as they fought a strong rebound in equity values and lost (-5.65%) on average.
Directional Trading funds were the only hedge fund strategy group to decline during March, losing 1.08% on average. Macro and Market Timing funds actually advanced with returns of 0.60% and 1.44%, respectively, but Futures managers were the primary reason for the decline in the strategy group. CTA managers struggled to find profitable trades within the commodity complex and as a result, this sub-strategy fell by 1.96% in March.
Finally, Specialty Strategy managers were the best performing group of hedge funds during March, primarily due to strong returns from Emerging Market funds. These managers gained 4.76% on average while Fixed Income and Multi-Strategy managers advanced 2.00% and 0.49%, respectively...more>>
|
Greenwich Alternative Investments Hedge Fund Index |
|||||||||
Total Return |
3 Yr Annual |
5 Yr Annual |
|||||||
Index |
Mar 09 |
Feb 09 |
YTD |
CAR |
STD |
CAR |
STD |
||
| Global Hedge Fund | 1.5% |
-1.0% |
0.4% |
0.4% |
-0.2% |
7.2% |
3.6% |
6.4% |
|
| Global Long/Short | 2.5% |
-2.0% |
-0.1% |
-0.1% |
-2.9% |
9.3% |
2.7% |
8.4% |
|
| Global Market Neutral | 0.9% |
-0.5% |
1.6% |
1.6% |
-9.6% |
0.8% |
5.6% |
3.2% |
4.7% |
| Futures | -2.0% |
0.0% |
-2.1% |
-2.1% |
8.3% |
9.7% |
8.8% |
6.9% |
9.4% |
Benchmark |
YTD |
CAR |
STD |
CAR |
STD |
||||
| Barclays Capital Agg Bond Index | 1.4% |
-0.4% |
0.1% |
0.1% |
3.1% |
5.8% |
4.1% |
4.1% |
3.9% |
| S&P 500 Index | 8.8% |
-11.0% |
17.7% |
14.7% |
|||||
| MSCI World Index | 7.2% |
-10.5% |
-12.5% |
-12.5% |
-44.0% |
-15.5% |
18.9% |
-5.3% |
16.0% |
| ASX 200 | 7.98% |
-4.57% |
-1.98% |
-1.98% |
-29.5% |
-7.5% |
16.8% |
5.5% |
14.6% |
| CAR= Cumulative Average Return, STD = Standard Deviation | Source: Greenwichai.com |
Meanwhile, Australian hedge funds returned an average 2.1 percent in March, beating the 1.3 percent profit of their global peers. The Australian Fund Monitors Index, which tracks the performance of more than 200 hedge funds managed from within the country, rebounded from a 1.6 percent drop in February, based on 42 percent of the funds reporting...More>>
Markets
Sentiment (based on macro manager survey)
Macro Managers are mixed about the prospects for U.S. Equities in April, despite the 8.54% gain in the S&P 500 during March. For the month, 45% of managers reported a bullish view of equities versus 75% in March; 36% of managers reported a neutral view and 18% reported a bearish view. Managers were, however, less mixed on the U.S. Dollar versus last month, with 55% expressing a bullish outlook, 18% a neutral outlook, and 27% a bearish outlook. With respect to 10-year U.S. Treasury prices, macro managers revisited February levels. For the month, 45% of managers reported a bearish outlook, 27% of managers reported a neutral outlook, and 27% reported a bullish outlook.
News
SGX says short-selling helps markets
The Singapore Exchange (SGX), one of the few bourses that did not ban short-selling last year, has reaffirmed its opposition to such restrictions, saying short-sellers helped improve market efficiency. "Short-selling is a legitimate market activity and this is well-recognized both in financial literature and in international markets," said SGX's head of risk management and regulation, Yeo Lian Sim...more>>
Demand for hedge funds will return post-crisis
Hedge fund assets are expected to bottom out at around $1 trillion this year. However, capital appreciation and an estimated $800 billion in net inflows over the next four years are expected to push global levels to $2.6 trillion by 2013. All that is according to a new study of institutional investors, investment consultants and hedge funds released today by The Bank of New York and Casey, Quirk & Associates...more>>
Fund of fund hedge fund investment experience positive say most institutional investors
Hedge funds have borne much of the brunt of the fallout from the Madoff scandal and global financial meltdown, with some commentators labeling them “a cancer” and others casting the industry as broadly responsible for investors’ misfortune.
However, a new research report by Casey, Quirk has found that to the contrary, for most institutional investors, the foray into hedge funds via funds of hedge funds has been a largely positive experience. Funds of hedge funds have provided needed and desired skills and products to investors strapped for time and resources. Additionally, the industry has increasingly improved itself by increasing transparency, offering products and services for lower fees, and working with clients in a truly consultative manner. More than 80% of institutionally-focused investment consultants recently surveyed indicate they feel their clients will prefer funds of hedge funds to direct investing.
Global alternatives managers Van Mac Group Managing Director Scott MacDonald agrees, saying that quality research of managers must assist institutional investors and with the ability to place managers on a ‘SMA’ platform overlay exposures with mandate compliance software and other risk metrics – hence better reporting will defeat, rather than perpetuate, fraud through their comprehensive due diligence processes and transparent management styles.
“Van Mac Group has an innovative transparent investment approach that allows investors to track the progress of their investments.
“We believe the future lies in the managed account platform approach,” says Mr MacDonald. “Van Mac Group’s investment platform, known as the Multi Asset Alternatives Fund or MAAF, allows managers to be combined (added to one reporting platform) and reports to one entirely independent administration entity that is able to control liquidity and trading using new systems capable of coping with complex, ever-evolving investment instruments and issues of equalization in one daily report.
“As well as allowing full transparency and structural integrity for the institutional investor, Van Mac Group’s service costs under 75 bpts pa in total rather than the standard fund of fund fee of up to 2-3% pa.
To learn more contact Scott MacDonald to discuss your interests in this area.
Trends
Top UK pension fund may invest up to 20 pct in alternatives
The UK's largest pension scheme, the BT Pension Scheme (BTPS) could invest up to 20 percent of its assets in alternative asset classes including hedge funds, a senior executive in charge of its investments said recently...more>>
Mistresses are the credit crunch’s latest victims
As men, fearful for their jobs and marriages, seek to cut back on their assets and expenditures, mistresses are facing a cull. A recent survey reports that nearly half of analysts, stockbrokers and hedge-fund managers are preparing to let the other woman go. There’s no doubt about it: times are bad for good time girls...more>>
Well-off chiefs turn to charity
Some chief executives, chastened by rising anger over executive pay and bonuses, are setting up charities, giving away money or waiving their salaries. Senior managers at Porsche and Volkswagen, who made millions on the back of controversial share price gains, have led the way with charitable donations. Wendelin Wiedeking, chief executive of Porsche, earned almost €80m (£72m) last year at the German sports carmaker, drawing scorn from some in Germany. He has set up two charities with €5m each to help needy families in the small German towns where he grew up and now lives. This is just small change, however, compared with Christopher Cooper-Hohn, a hedge fund manager who has given £463m to children’s charities in one year...more>>
Sharia hedge funds seen boosting market liquidity
Islamic hedge funds can add to market liquidity, Malaysia's capital markets regulator said recently, amid some scholars' criticism that such funds open the back door to gambling in Islam. Hedge funds have been blamed for the recent rout in financial stocks but some bankers say hedge fund tools such as derivatives can help Islamic banks manage risks as the industry grows beyond its traditional niche markets...more>>
Research
Survey: Hedge funds continue to be favorable asset class among global investor community
Market events most likely to impact performance returns were uncertainty over the full extent of global credit crisis and liquidity, according to the first Alternative Investment Summit Industry Survey from the Terrapinn Alternative Investment Summit team. Favorable asset classes over the next 1-2 years include Distressed Assets, Private Equity, Infrastructure and Hedge Funds. The majority of respondents, which included 250 senior level decision-makers from the global institutional investor community, also said they would support increased regulation in guidelines on valuation methodologies, investor reporting standards and disclosure of financing arrangements...more>>