Money managers under the microscope
May was a bumper month for the battered hedge fund industry with an impressive 5.23 percent return, the best monthly gain in almost a decade.
The data, from Hedge Fund Research, takes returns for the first five months of the year to 9.43 percent. After last year’s record losses, this is a much healthier figure and more reminiscent of the returns during the industry’s boom years such as 1999 or 2003.
Early data from Credit Suisse/Tremont meanwhile puts the monthly return at 3.61 percent, making a year-to-date 6.25 percent.
So are the good times back for hedge funds?
Well, possibly not. While the headline figure looks good, it comes during what Sarasin’s Guy Monson calls “a most extraordinary rally”. The MSCI World index is up 8.67 percent this month, while for the first five months of the year it has risen 5.4 percent.
The due diligence, or lack of it, undertaken by investors has been one of the big talking points following the alleged fraud by U.S. financier Bernard Madoff.
But according to risk management firm Riskdata, the scandal could potentially have been spotted by (fairly complicated) statistical analysis.