The pace of hedge-fund liquidations slowed again in the second quarter but surviving funds are being forced to lower their fees, data provider Hedge Fund Research Inc. said Thursday. Just over 3% of hedge funds, or 292 funds, went out of business in the three months to June 30, HFR said, down 22% from the 376 funds that liquidated in the first three months of the year. Amid hedge funds’ worst year on record, when average losses were more than 19%, 1,471 funds liquidated in 2008. Performance this year has been much better, along with broader stock and bond markets, at an average return of 14.1% in the eight months to Aug. 31. That has made it easier to launch new funds, with 182 started in the second quarter, up from 148 in the first quarter. The dismal results in 2008 shook investors’ confidence in the hedge fund industry’s claim it could make money in both up and down markets. The appeal of the investments also waned as many hedge funds exercised their right to refuse investors’ requests for their money back, saying they didn’t want to be forced sellers of their assets. One apparent knock-on effect is that the average incentive fee managers collect on their funds’ performance has come down. HFR said these fees have declined for three quarters and now stand at 19.18%, down from 19.34% in the first quarter of 2008. Though the fees are still an anomaly within asset management, where most fund managers don’t get any percentage of performance, the decline shows that the traditional hedge-fund model of “2 and 20″ – 2% fees to manage money and 20% on performance gains – is steadily breaking down. “As hedge fund industry consolidation continues, multiple data … suggest the impact of a tumultuous 2008 remains both widespread and sustained,” said HFR President Kenneth Heinz. “Performance gains for 2009 have been the strongest since 1999, but investors are making demands for greater transparency and structural improvement, setting the stage for the next period of industry expansion.” Meanwhile, HFR said JPMorgan (JPM) is the largest prime broker by assets, while Goldman Sachs (GS) is prime broker to the biggest number of funds. Company Web site: http://www.hedgefundresearch.com -By Margot Patrick, Dow Jones Newswires; +44 (0)20 7842 9451; margot.patrick@dowjones.com (END) Dow Jones Newswires

The Securities and Exchange Commission on Monday made permanent a rule designed to curtail abusive “naked” short selling. “The new rule, Rule 204, requires broker-dealers to promptly purchase or borrow securities to deliver on a short sale,” the SEC said. A temporary rule meant to curtail the practice was set to expire on July 31. The SEC said it is also working together with several self-regulatory organizations to make short sale volume and transaction data available

The Greenwich Global Hedge Fund Index (GGHFI) returned 2.21% in February, rebounding from January’s -2.79% worst return since 2002, Greenwich Alternative Investments has announced.

The S&P 500 and MSCI World Equity posted negative returns of -3.32% and -0.74% respectively, while the FTSE 100 gained 0.08%. All hedge fund strategy groups ended the month with gains.

“February’s rebound in the midst of market uncertainty continues to highlight the diversification benefits of hedge funds,” noted Margaret Gilbert, Greenwich Managing Director.

Directional Trading Group’s 5.48% return was the strongest, driven largely by futures managers who capitalized on volatile commodities markets posting a February gain of 7.2%. Long-Short Equity Group strategies also benefited from choppy equity markets, gaining 1.28%.

For the second month in a row, dedicated short sellers were the top performers in this group, gaining 4.12% on the month. The Specialty Strategy Group returned 2.74% on average, led by Emerging Markets, which rebounded 4.4% after its January decline.

The Market Neutral Group was the weakest, but still managed to show an average return of 1.11%.

February’s GGHFI currently includes 1,091 constituent funds. Final February results will be posted by Greenwich in early March, once additional funds have submitted returns.

Nur eine der sechs Hedge Fond Strategien, die vom Dow Jones Hedge Fund Indexes erfaßt werden erzielte im November Gewinne.
Equity market neutral war der beste Performer und die einzigste Strategie die im Gewinne erzielte.

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Vier von sechs Strategien haben im September Gewinn gemacht, fünf von sechs Hedge Fond Strategien sind für dieses Jahr im positiven Bereich.

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The Greenwich Global Hedge Fund Index (the GGHFI) returned +3.01 percent in October, representing its strongest month since January 2006 and, on a year-to-date basis, the best performance for the first ten months of the year since 2003. The GGHFIs year-to-date return of +12.39 percent is on par with the MSCI World Equity Index (YTD: +12.75 percent), and ahead of the S&P 500 (YTD: +10.86 percent) and FTSE 100 (YTD: +8.06 percent).

The Greenwich Global Hedge Fund Index (the GGHFI) returned +3.01 percent in October, representing its strongest month since January 2006 and, on a year-to-date basis, the best performance for the first ten months of the year since 2003. The GGHFIs year-to-date return of +12.39 percent is on par with the MSCI World Equity Index (YTD: +12.75 percent), and ahead of the S&P 500 (YTD: +10.86 percent) and FTSE 100 (YTD: +8.06 percent).

To view the full report, click here.

Author: RiskCenter Staff
Date: 2007-11-16