"History is always repeating itself, but each time the price goes up." - Anonymous
Performance
Hedge Funds Continue to Climb in April
Hedge funds as measured by the Greenwich Global Hedge Fund Index ("GGHFI") continued their upward climb in April. All Greenwich hedge fund strategy groups advanced during the month. The GGHFI gained 1.08% compared to global equity returns in the S&P 500 Total Return (+1.58%), MSCI World Equity (-0.16%), and FTSE 100 (-2.22%) equity indices. Seventy-one percent of constituent funds in the GGHFI ended the month with gains. Strong first quarter earnings and stable credit markets propelled hedge funds to their third positive month in a row for 2010, while April's performance established a new all time high for the Greenwich Global Hedge Fund Index, erasing the effects of the financial crisis.
|
Greenwich Alternative Investments Hedge Fund Index |
|||||||||
Total Return |
3 Yr Annual |
5 Yr Annual |
|||||||
Index |
Apr 10 |
YTD |
CAR |
STD |
CAR |
STD |
|||
Global Hedge Fund |
1.1% |
2.7% |
3.7% |
4.5% |
19.4% |
3.4% |
8.1% |
7.2% |
6.8% |
Global Long/Short |
1.1% |
3.6% |
4.4% |
5.7% |
23.2% |
2.1% |
10.5% |
7.4% |
8.9% |
Global Market Neutral |
1.2% |
1.7% |
4.3% |
3.5% |
19.1% |
3.6% |
6.2% |
6.5% |
5.1% |
Multi Strategy Index |
0.9% |
1.8% |
2.9% |
2.9% |
16.3% |
4.0% |
7.1% |
8.1% |
6.2% |
Benchmark |
YTD |
CAR |
STD |
CAR |
STD |
||||
Barclays Agg Bond Index |
1.0% |
-0.1% |
2.8% |
1.3% |
8.3% |
6.3% |
4.2% |
5.4% |
3.7% |
S&P 500 Index |
1.6% |
6.0% |
7.0% |
11.0% |
38.8% |
-5.1% |
20.2% |
2.6% |
16.3% |
MSCI World Index |
-0.2% |
5.9% |
2.6% |
7.1% |
34.2% |
-8.8% |
21.8% |
1.3% |
17.7% |
| CAR= Cumulative Average Return, STD = Standard Deviation | Source: Greenwichai.com |
Locally, Australian Fund Monitors (AFM) believes recent market turmoil will test or prove hedge fund performance. Average returns measured by Australian Fund Monitor's index for April have increased to be outperforming the ASX200 by close to two per cent. AFM is predicting long short managers and equity market neutral funds will cushion the downside of the latest market turmoil, while the best performers in May are likely to be amongst the global macro and long volatility funds. Many of these have struggled over the past year while markets rallied, against their predictions that sovereign debt and structural issues were an accident waiting to happen.
News
Overseas Madoff investors get back $15.5 Billion
Not all is lost on the Madoff front. It seems, with about 720,000 investors outside the United States who lost money to the convicted swindler Bernard L. Madoff settling with their banks, receiving about $15.5 billion in all...more>>
Hedge funds react angrily to German shorting ban
Hedge funds have responded angrily to Germany's controversial decision to ban some naked short-selling. The move aims to curb the activities of speculators – particularly hedge funds – who are blamed by some politicians for exacerbating the financial crisis. But funds say they make markets more efficient and the ban could create more problems...more>>
Meanwhile, India’s largest bourse plans new short-selling system
National Stock Exchange of India Ltd., India’s largest bourse, plans to offer a new system for short sales within the next few weeks aimed at luring investors to the local market after expanding in the U.S. and Singapore. The company, which counts Goldman Sachs Group Inc. and Temasek Holdings Pte as shareholders, will introduce the short- selling platform to meet a "huge demand," according to Chief Executive Officer Ravi Narain...more>>
Trends
Pension fund boosts hedge fund exposure by $2.9 billion
The New Jersey Pension Fund has announced that it is upping its hedge fund exposure to a total of 6.75 percent to protect against losses in the stock market. This is $4.5 billion based on the current value of the fund, from 4.3 percent, or $2.9 billion...more>>
Asia private banks favour event driven hedge funds
Meanwhile in Asia, private banks are recommending that clients allocate more money to hedge funds, in particular event-driven funds that will benefit from an expected surge in mergers and acquisitions and debt restructuring...more>>
Is the EU’s crackdown on hedge funds bad for business?
Hedge funds have a lot to answer for. They control more than $2 trillion in assets worldwide, use complex and secretive trading strategies to deliver high investment returns, are subject to little or no regulation, and - according to their critics - they fueled the risk-taking culture that led to both the credit crunch and the recent run on Greece's debt. But according to one report, the EU crackdown is just the beginning of financial reforms in the pipeline, which include a crackdown on the derivatives market, new legislation on credit rating agencies, limits on banker pay, and new watchdogs being set up to police banks, insurers and markets...more>>
Research
Vanguard finds investors favour low cost funds
More than 80% of net flows into mutual funds and ETFs over the past decade have gone to the lowest-expense quartile of funds, according to a new report, "Costs matter: Are fund investors voting with their feet?" released recently. The results suggest investors have become increasingly focused on costs as expected market returns have declined. The study showed 86% of net equity inflows going to the lowest-cost quartile of funds for the decade ended Dec. 31, 2009. Contributing to that overall total, 93% of net flows to index equity funds, 59% of net flows to ETF equity funds and 55% of net flows to active equity funds went to those with bottom-quartile expenses, the study showed.
Read the report here.