WEST PALM BEACH, FL (HedgeCo.Net) – The year 2004 has not been a good year for the global hedge fund industry, according to Mark Chambers, Man Group’s head of sales management. Mr. Chambers made suchremarks at the Italian Hedge Fund Summit in Milan that was sponsored by the Information Management Association. According to him, “2004 is not going to be a good year, unless something changesdramatically, but I don’t think it will.”
Chambers does not think such situation will drastically improve during the final quarter of the year. He explained further, “Over the last few months money coming in has slowed, not surprisingly. Hedge funds still offer diversification, absolute returns and capital preservation in falling markets. People are not convinced the hedge fund story is over.”
Hedge fund returns have declined in the past four months due to difficulties in the markets. Some of these problems deal with low trading volumes in the equity exchanges, and subsequent reductions in levels of volatility. Such consequence made it harder for hedge fund managers to engage in short term trading activities as they have done in the past. Many fund managers chose to stay on the sidelines for the meantime.
The average hedge fund return year-to-date is about 2%. This performance continues to exceed the equity markets, which are still in the negative territory. The average return for equity indexes is about -0.6 year to date. There were also other factors contributing to such lackluster performance, including the security concerns, and skyrocketing energy prices.
Chambers also thinks the recent interest rate hikes by the US Federal Reserve Bank have not helped matters either. They have been pushing the federal funds rate up, which has been leading to further erosion of the US dollar in the international currency exchanges. Energy remained the main profitable strategy for some hedge fund managers, particularly those applying the global macro strategies. However, global macro portfolios and managed futures have not performed well so far this year.
Chambers however does not think that these problems will lead to a �hedge fund bubble,� which has become a recurrent theme in the minds of some people.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
HedgeCo.Net is the most popular hedge fund database and community in the world. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com.
