Hedge Fund Performance In August

The UK’s Times Online, citing a report from Hedge Fund Research [HFR], recently covered the August performance of a variety of 20 different strategies employed by hedge funds. Of the 20 different hedge fund strategies tracked by HFR, only one managed to generate a positive return in the month of August. The other 19 posted losses for the month. One particular strategy, focused on Macro themes, was down a whopping 8% for the month.

The Times’ makes an excellent point regarding the losses posted by 95% of the strategies tracked over the period:

The uniformity of the losses across much of the industry raised questions over the role of hedge funds, which market themselves as alternatives to traditional equity investment in return for large fees. Hedge fund managers have traditionally been seen as traders able to avoid the bumps of turbulent markets and capitalise on volatility.

If my memory serves me correctly, there was a time when “Hedge Fund” was typically interpreted as a means of hedging against broader market trends. More specifically, if I held a large, passively managed stock portfolio I may be inclined to place some capital into a hedge fund because these were the guys that could and would provide some degree of protection were the market to turn sour.

This entry was posted on Friday, September 7th, 2007 at 9:21 pm and is filed under Uncertainty. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Comments are closed.