Hedge funds see worst year since financial crisis# Stock
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Hedge funds see worst year since financial crisis
Jeff Cox | @JeffCoxCNBCcom
Tuesday, 20 Oct 2015 | 10:25 AM ETCNBC.com
Hedge fund performance over the past three months hearkened back to the bad
old days of the financial crisis.
Poor performance weighed heavily on the industry, causing the biggest net
loss in capital since the fourth quarter of 2008, according to data released
Tuesday by HFR. The $95 billion decline pushed total industry assets
further from the vaunted $3 trillion mark.
As measured by the HFRI Fund Weighted Composite Index, the industry saw a 3.
9 percent performance drop in the third quarter, taking the barometer into
negative territory for the year at minus 1.5 percent. At this pace, hedge
funds will turn in their worst performance year since 2011.
The bright side is that the industry actually outperformed the equity market
through the end of the quarter, as the S&P 500 fell more than 6 percent
through the first nine months. The S&P has since rebounded, jumping 5.6
percent in October to pull within 1.5 percent of breakeven for the year.
Pierre Desrosiers | Photographer's Choice RF | Getty Images
Kenneth J. Heinz, HFR's president, said funds have followed suit and should
be able to reverse the earlier money drain.
Read More The news keeps getting worse for hedge funds
"Recent market turmoil has resulted in increased risk aversion by investors
but has also created opportunities for innovative approaches in key tactical
and strategic areas," Heinz said in a statement. "Funds of all sizes have
already experienced a powerful performance recovery through mid-October,
which is likely to drive industry capital gains into year end."
Investors actually have been putting money to work in hedge funds this year.
Total inflows came to $47.9 billion in the third quarter, offsetting $42.3
billion in redemptions for $5.6 billion in net flows, according to HFR.
Event-driven strategies have performed poorly, losing 5.1 percent in the
quarter and 2.85 percent for the year, yet saw inflows of $5.4 billion.
Read MoreThe 'Icahn bottom'? Where his call for doom stands
Equity strategies have received the most cash, pulling in $23.8 billion for
the year and $2.4 billion for the quarter despite losing 2.3 percent through
the first nine months.
The best performing industry strategy has been volatility, which was up 5.5
percent, while Latin America (down 20.2 percent) and energy (off 12.4
percent) represented the biggest losses.
Jeff Cox | @JeffCoxCNBCcom
Tuesday, 20 Oct 2015 | 10:25 AM ETCNBC.com
Hedge fund performance over the past three months hearkened back to the bad
old days of the financial crisis.
Poor performance weighed heavily on the industry, causing the biggest net
loss in capital since the fourth quarter of 2008, according to data released
Tuesday by HFR. The $95 billion decline pushed total industry assets
further from the vaunted $3 trillion mark.
As measured by the HFRI Fund Weighted Composite Index, the industry saw a 3.
9 percent performance drop in the third quarter, taking the barometer into
negative territory for the year at minus 1.5 percent. At this pace, hedge
funds will turn in their worst performance year since 2011.
The bright side is that the industry actually outperformed the equity market
through the end of the quarter, as the S&P 500 fell more than 6 percent
through the first nine months. The S&P has since rebounded, jumping 5.6
percent in October to pull within 1.5 percent of breakeven for the year.
Pierre Desrosiers | Photographer's Choice RF | Getty Images
Kenneth J. Heinz, HFR's president, said funds have followed suit and should
be able to reverse the earlier money drain.
Read More The news keeps getting worse for hedge funds
"Recent market turmoil has resulted in increased risk aversion by investors
but has also created opportunities for innovative approaches in key tactical
and strategic areas," Heinz said in a statement. "Funds of all sizes have
already experienced a powerful performance recovery through mid-October,
which is likely to drive industry capital gains into year end."
Investors actually have been putting money to work in hedge funds this year.
Total inflows came to $47.9 billion in the third quarter, offsetting $42.3
billion in redemptions for $5.6 billion in net flows, according to HFR.
Event-driven strategies have performed poorly, losing 5.1 percent in the
quarter and 2.85 percent for the year, yet saw inflows of $5.4 billion.
Read MoreThe 'Icahn bottom'? Where his call for doom stands
Equity strategies have received the most cash, pulling in $23.8 billion for
the year and $2.4 billion for the quarter despite losing 2.3 percent through
the first nine months.
The best performing industry strategy has been volatility, which was up 5.5
percent, while Latin America (down 20.2 percent) and energy (off 12.4
percent) represented the biggest losses.