Tags: Hedge | Funds | Worse | Year

Hedge Funds Facing Worst Year Since 1990

Friday, 09 Dec 2011 07:42 AM

This year could shape up to be the worst year for hedge funds since 1990 overlooking 2008, which was roiled by the near collapse of the global financial system, according to data from Hedge Fund Research.

The average hedge fund has lost 4.37 percent so far this year in absolute returns, Hedge Fund Research reports, and while 2008 was worse, disaster struck all at once in the last quarter of the year, while 2011 roiled in volatility all year, the Financial Times reports.

Blame the eurozone crisis and issues such as political impasses during the U.S. debt ceiling debacle and ensuing downgrade of U.S. ratings by Standard & Poor's.
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"Markets have been dominated by high correlations and continue to behave based on political decisions," says Jeff Holland, managing director of Liongate Capital, which manages $3.2 billion.

"It is sentiment, rather than fundamentals, that has driven markets this year."

Many investors are running to the sidelines.

"The biggest risk is investing in a market that is uncertain. Guys who have tried to predict the political events in Europe are the guys who have got their fingers burned this year," Holland adds.

Separately, Hedge Fund Research reports that in the third quarter of this year, 213 hedge funds went out of business, the most since the first quarter of 2010 when 240 funds closed.

"Trends in launches and liquidations in 3Q11 clearly reflect both increased investor risk aversion and strategic preferences for 2012," says Hedge Funds Research President Kenneth J. Heinz, according to Forbes.

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This year could shape up to be the worst year for hedge funds since 1990 overlooking 2008, which was roiled by the near collapse of the global financial system, according to data from Hedge Fund Research. The average hedge fund has lost 4.37 percent so far this year in...
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2011-42-09
Friday, 09 Dec 2011 07:42 AM
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