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from Expert Zone:

Indian hedge funds get knocked down but get up again

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The fortunes of hedge funds focused on India continue to twist and turn, with many plots and subplots. After witnessing widespread losses and heavy redemptions in 2008, Indian hedge fund managers bounced back remarkably to post a 50 percent return in 2009. They continued their good form in 2010, delivering healthy gains of 12 percent during the year.

But in 2011, the managers witnessed losses amid declining markets and a depreciating rupee. At the end of that year, many managers expressed confidence in the underlying market for the following year and predicted gains for the rupee by mid-2012 -- both these predictions came to pass. The Eurekahedge Indian Hedge Fund Index was up 13.13 percent in 2012, making it the strongest regional hedge fund mandate for the year. Some of the funds even witnessed asset inflows in 2012 and early 2013, a rarity for Indian hedge funds since the financial crisis.

As such, Indian hedge fund managers started this year with their tails up, armed with strong returns and positive global investor sentiment. The managers witnessed healthy returns in January, helped by a rally in underlying equities as foreign investors poured more cash into Indian stocks. And just when you thought the sector was out of the woods, the positive run ended -- most managers witnessed losses in February and March, finishing the first quarter in the red.

Investor reaction to the 2013-14 Budget was not very supportive, given that it did not include significant infrastructure development announcements. The second quarter was worse as the rupee declined, further adding to market losses suffered by managers. July and August witnessed a continuation of the negative streak, as the Reserve Bank of India’s (RBI) measures to support the rupee further hurt investor sentiment.

from Unstructured Finance:

Greenlight’s David Einhorn slams Fed, again

David Einhorn

David Einhorn is pointing at you Fed

Greenlight Capital’s David Einhorn, one of the most closely followed managers in the $2.2 trillion hedge fund industry, is out with his latest investment letter and provides another lambasting of the U.S. Federal Reserve for what he describes as short-sighted policy decisions with regards to its continued quantitative easing.

“We maintain that excessively easy monetary policy is actually thwarting the recovery,” Einhorn said of the Fed and its decision to continue buying $85 billion a month in Treasuries and mortgage-backed securities. “But even if there is some trivial short-term benefit to QE, policy makers should be focusing on the longer-term perils of QE that are likely far more important.”

from Global Investing:

US investors prop up emerging equity flows

U.S. mutual fund investors are ploughing on with bets on emerging market equities, according to the latest net flows numbers from our corporate cousins at fund research firm Lipper. Has no one told them there's supposed to be a massive sell-off?

August was the 30th straight month the sector has seen net inflows, and the 9th straight month of net inflows above $1 billion. Sure, there's a downward trend from the February peak, but the resilience of demand is notable given doom-laden headlines about how EM markets will fare once the Fed feels its generosity is no longer required.

from Global Investing:

After disappointing start to 2013, how will hedge funds catch up?

Despite the early-year rally in equity markets, some hedge funds seem to have had a disappointing start... yet again.

JP Morgan notes that the industry's benchmark HFRI index was up 2.8% by end-February,  well below the 4.6% for MSCI All-Country index.

from Photographers' Blog:

Lipizzaners return home

By Heinz-Peter Bader

It was a beautiful late summer day with blue sky and not a single cloud when I went to the village of Piber some 200 km (124 miles) west of Vienna to see the world famous Lipizzaner horses. Well, actually, the 40 young studs were not famous yet, but some of them would be selected to become famous some day - members of the Spanish Riding School in Vienna.

SLIDESHOW: DANCING HORSES OF VIENNA

The young Lipizzaners spend their summers in the mountains, and the return back to the stud is traditionally celebrated. They are decorated with flowers, receive blessings in front of the local church and are presented to the people before they arrive at their stable after a 16 km (10 mile) walk.

from Unstructured Finance:

Hedge funds vs. darts

By Matthew Goldstein

The Wall Street Journal used to run a feature in which some of its staffers would periodically pick stocks by throwing darts against a target. The idea was to see how many times stock picking by pure chance could outperform the picks of a bunch of experts.

The WSJ ended the popular feature several years ago but maybe it's time from someone to bring it back and this time use darts to try to outperform some of top hedge funds managers. That's because with the average hedge fund up about 1.2% during the first-half of the year, it would seem an investor on his or her own could do just as well picking stocks blindfolded.

from Global Investing:

Three snapshots for Thursday

Fears that Athens is on the brink of crashing out of the euro zone and igniting a renewed financial crisis have rattled global markets and alarmed world leaders, with Greece set to figure high on the agenda at a G8 summit later this week. This chart shows the impact on assets since the Greek election:

Euro zone banks now account for only 8% of total euro zone market value - they were over over 20% of the market in 2007:

from Global Investing:

Three snapshots for Wednesday

This chart shows the wide dispersion in equity market performance so far this year. In local currency terms Korea has a total return of nearly 12% and Germany over 10%, this compares to Italy at-6% and Spain at -16%.

In contrast to last year, this has driven average correlations between equity markets lower.

from Global Investing:

Three snapshots for Tuesday

A good sign for UK growth - activity in Britain's construction sector unexpectedly accelerated in March, the Markit/CIPS  Purchasing Managers' Index rising to 56.7 from February's 54.3.

An update on cross-asset performance this year as we head into the 2nd quarter:

Equity risk premium by region:

 

from Global Investing:

Hedge funds still lagging behind

How are hedgies performing this year?

The latest performance data from Nice-based business school EDHEC-Risk Institute shows various hedge funds strategies returned on average 1.46% in January, far behind the S&P 500 index which gained almost 4.5%. Hedge Fund Strategies Jan 2012 YTD* Annual Average Return since January 2001 Annual Std Dev since January 2001 Sharpe Ratio Convertible Arbitrage 2.22% 2.2% 6.5% 7.3% 0.34 CTA Global 0.49% 0.5% 6.6% 8.6% 0.30 Distressed Securities 3.28% 3.3% 10.3% 6.3% 1.00 Emerging Markets 4.55% 4.5% 10.5% 10.7% 0.61 Equity Market Neutral 1.01% 1.0% 4.5% 3.0% 0.16 Event Driven 2.95% 2.9% 7.8% 6.1% 0.62 Fixed Income Arbitrage 1.33% 1.3% 6.0% 4.4% 0.46 Global Macro 2.05% 2.1% 7.0% 4.5% 0.68 Long/Short Equity 3.36% 3.4% 5.3% 7.3% 0.17 Merger Arbitrage 1.03% 1.0% 5.4% 3.3% 0.43 Relative Value 1.95% 1.9% 6.4% 4.8% 0.51 Short Selling -6.85% -6.9% 0.3% 14.1% -0.26 Funds of Funds 1.65% 1.7% 3.6% 5.1% -0.07

 

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