Funds Hub
Money managers under the microscope
Morning line-up
Hedge fund stories from the past 24 hours from Reuters and elsewhere:
Will ETFs replace hedge funds?…. No – Seeking Alpha
Hintze the Prince’s philanthropist – Bloomberg
Hedgies to top stocks, bonds in 2010 – Reuters
Calpers probes hedge fund advisors – LA Times
Managed futures on the rack – Reuters
What a difference a year makes
Last year’s record poor year for the hedge fund industry was a boom period for managed futures.
Months of falling equity prices, plus a first half of rising oil prices followed by a second half of falling oil prices provided some great trends for these computer-driven funds to follow.
But 2009 is an altogether different prospect.
Latest data from HFR shows hedge funds in general made a gain of 0.13 percent in June, taking first half performance to 9.41 percent.
In contrast, managed futures are struggling. Credit Suisse/Tremont shows them down 5.23 percent in the first five months of the year.
And Man Group, whose trading statement is out today, has been hit by flagship strategy AHL which, although long term performance is excellent, is down around 15 percent year-to-date.
Man are not alone. Winton Capital’s Futures Fund, which made 20.99 percent last year, is down an estimated 7 percent in the first half.
Strong Man no more
A year ago in its final results Man Group – the world’s biggest listed hedge fund firm — was able to report assets under management of $78.5 billion and a 60 percent rise in profits.
The firm’s shares took a pounding this morning, although have since made up some ground, after the firm revealed assets are now down to $44 billion, while profits almost halved.
Like much of the hedge fund industry, the firm has suffered from poor performance and client redemptions.
And like many managed futures strategies, AHL’s fortunes have turned. The flagship strategy is down 2.2 percent in the year to May 19, although performance can be volatile.
(The turnaround in managed futures funds in general has been even more dramatic — after topping the charts in 2008, according to Credit Suisse/Tremont, they are now the second worst-performing strategy year-to-date.)
But Man’s problems don’t end there. Madoff-exposed RMF Four Seasons is down 15.6 percent in the year to March, while Glenwood lost 16.7 percent and multi-strategy Man-IP 2202 8.3 percent.
Going global
Global macro and managed futures (CTAs) are still where it’s at, it seems, when it comes to funds of hedge funds.
Nigel Davies’ poll of portfolio managers shows these are the two strategies they are expecting above average returns from in the first half of 2009.
It is little surprise that these two strategies have been picked out.
After funds of hedge funds’ worst-ever returns last year — a loss of 19.97 percent, according to Hedge Fund Research — managers are bound to look to those few strategies that did well.
Managed futures returned an impressive 18.33 percent, according to Credit Suisse/Tremont, while global macro lost 4.62 percent — a loss, but much better than the average.
What’s more, managed futures and global macro are both highly liquid strategies, and after the evaporation of liquidity in some credit markets and the gates or suspensions subsequently imposed by some funds, funds of funds are likely to want ready access to their money.
This is especially true after many had to pay out cash reserves on margin calls on currency hedges after the dollar’s strong rise against the euro and sterling — cash they could have used to meet redemptions.
