Recently somebody said, "Hey, you lost weight," and I said, "Yeah, thirty-five pounds and three and a half billion dollars." So I'm quite a bit lighter and more flexible than I was.
- John Malone
Performance
Hedge Funds Advance to Break-Even for 2010
Hedge funds as measured by the Greenwich Global Hedge Fund Index (GGHFI) recouped January losses during the month of February to move almost even on the year. The GGHFI returned +0.68% compared to global equity returns in the S&P 500 Total Return +3.10%, MSCI World Equity +1.23%, and FTSE 100 +3.20% equity indices. Sixty-five percent of constituent funds in the GGHFI ended the month with gains. Long-Short Equity managers trailed most major equity indices but still gained 0.90% in February. Growth and Opportunistic funds posted almost identical results, gaining 0.88% and 0.85%, respectively. Value-based funds posted slightly better performance, gaining 1.06%. Market Neutral funds gained in February, advancing 0.58% on average due once again to positive performance across multiple strategies, with Equity Market Neutral funds the best performing group of Market Neutral managers in February, advancing by 0.95% in their best month since May 2009. Directional Trading funds bounced back from their loss in January to post positive returns of 0.64% in February. Macro funds showed the best returns of any hedge fund strategy during the month, gaining by 1.34%.
|
Greenwich Alternative Investments Hedge Fund Index |
|||||||||
Total Return |
3 Yr Annual |
5 Yr Annual |
|||||||
Index |
Feb 10 |
YTD |
CAR |
STD |
CAR |
STD |
|||
Global Hedge Fund |
0.7% |
-0.8% |
-0.1% |
0.9% |
20.6% |
3.0% |
8.1% |
6.0% |
6.9% |
Global Long/Short |
0.9% |
-1.2% |
-0.3% |
2.0% |
26.1% |
1.6% |
10.4% |
5.7% |
8.9% |
Global Market Neutral |
0.6% |
0.7% |
1.3% |
3.0% |
19.1% |
3.4% |
6.2% |
5.6% |
5.1% |
Multi Strategy Index |
0.2% |
0.0% |
0.2% |
0.3% |
14.7% |
4.1% |
7.2% |
7.1% |
6.3% |
Benchmark |
YTD |
CAR |
STD |
CAR |
STD |
||||
Lehman Agg Bond Index |
0.4% |
1.5% |
1.9% |
0.3% |
9.3% |
6.2% |
4.2% |
5.4% |
3.7% |
S&P 500 Index |
3.1% |
-3.6% |
-0.6% |
1.3% |
53.6% |
-5.7% |
20.1% |
0.4% |
16.1% |
MSCI World Index |
1.2% |
-4.2% |
-3.0% |
-1.4% |
50.9% |
-8.7% |
21.7% |
-0.8% |
17.5% |
| CAR= Cumulative Average Return, STD = Standard Deviation | Source: Greenwichai.com |
Locally, February is turning out to have been a tough month for Australian hedge funds, particularly those with a local equity based mandate, according to figures from Australian Fund Monitors. Concerns that January's global issues would continue to put downward pressure on equities, commodities and the Australian dollar did not eventuate, leaving some managers with less risk on the table. February's reporting season also produced a few results (for example Toll Holdings), which were well outside market expectations. The index rose marginally by 0.08 per cent in February, with equity based funds falling by 0.04 per cent and non equity based funds gaining 0.34 per cent. The strongest performing strategy was currency/FX, up 1.52 per cent. The ASX 200 rose by 1.49 per cent in February.
News
Van Mac offers 'once in a blue moon' property investment opportunity
A once in a 'blue moon' opportunity exists to benefit from real estate debt capital mismatch, according to Van Mac Group Managing Director Scott MacDonald.
"Australia is a stable safe-haven and proxy for China growth," he says. "Population growth at all time high with continued demand for skilled workers, and interest rates are on the rise showing that the economy is strong and growing.
"This is a macro economic 'perfect storm' for growth," Mr MacDonald continues. "But housing approvals at all time low, and 20 year forecasts are showing a growing gap and shortfall in the market. The supply of equity/debt capital for property developers is currently in short supply, and we see high demand with low market risks.
"Combined with a high number of quality projects and almost zero competition for funding, we see a clear exit and capital return strategy for shareholders, so we are raising up to A$300m in next two to three years to meet that need, and return a potential annual dividend of 15 percent per annum before tax to investors.
"This is a great opportunity for both domestic and international investors to take advantage of this rare confluence of events, and help support Australia's continued economic growth in the process," he says. Contact Scott MacDonald to find out more.
2010 could be a banner year for hedge funds
If 2009 was the worst of times for institutional investment in hedge funds and funds of funds, 2010 is shaping up to be among the best. Net inflows from institutional investors worldwide into hedge funds totaled just $21.5 billion for the year ended Dec. 31, down 40% from 2008 and 68% from 2007. but industry observers expect the pace of hedge fund investment - and total new dollars invested - to be extremely strong in 2010. And early numbers appear to bear this out...more>>
Change of tack as hedge funds take on the lessons of the crisis
The hedge fund industry is bouncing back from its performance losses in 2008 and the subsequent investor redemptions, but the post mortem is still underway about how much protection they and their investors received from risk management systems during the crisis. Pressure is mounting on managers both large and small to upgrade their risk functions if necessary – but also on investors to make effective use of the information that is now being made available to them. Without risk, a new report by Hedgeweek argues, the industry could offer no meaningful returns, but one of the key priorities for the future is to develop a better understanding of extreme risks that were not adequately picked up by risk management tools in the past, and to develop strategies that offer protection against large market gyrations and the collapse of generally understood relationships between asset prices. Read the report here.
Trends
EU hedge fund rules stalled as UK digs in heels
European Union plans to crack down on hedge funds stalled after Britain dug in its heels to head off new rules that could damage its financial center. The draft law had been intended to curb pay and borrowing at hedge funds and usher in an era of transparency for a secretive industry that many politicians said exacerbated borrowing difficulties in Greece by betting on its debt. But the finance ministers were unable at talks to resolve a dispute between Britain – which wants lighter regulation of an industry important for London's financial center – and Germany and France, which want a heavier clampdown...more>>
Financial centres vie for slice of hedge fund pie
Against the background of the looming European directive on alternative investment fund managers and the upcoming fourth instalment of the Ucits legislation governing cross-border investment products, financial centres in Europe and further afield are trading the first punches in the latest round of the regulatory arbitrage contest. Their handling of business around Ucits III and Ucits IV provisions – the former defining investment powers and the latter allowing funds to merge and run more efficient operations – have left Ireland and Luxembourg once more as prime movers...more>>
UK gives go ahead for green investment bank
British chancellor Alistair Darling has announced that the UK is to develop an investment bank worth £2 billion in order to help low-carbon industries with around half of the initial fund to be delivered through government funds, prompting concern that the bank would 'step on the toes' of the private sector's green cash flow...more>>
Research
Traditionally bullet-proof universities face tough times: Educational endowments returned -18.7% in 2009
Data gathered from American colleges and universities participating in the 2009 NACUBO-Commonfund Study of Endowments (NCSE) show that these institutions' endowments returned an average of -18.7 percent (net of fees) for the 2009 fiscal year (July 1, 2008 – June 30, 2009). The average annual three-year return for institutions participating in the Study was -2.5 percent, while the average annual return for the trailing five years was 2.7 percent. Over the past 10 years, participating institutions reported an average annual return of 4.0 percent (all returns are net of fees)...more>>