West Palm Beach (HedgeCo.net) – Funds of listed hedge funds are no longer providing reliable rates of return as the credit crunch continues – despite having been marketed as risk-free investments.<\/p>\n
Analysis from Citywire shows that the sector has declined by 1.8% in net asset values (NAVs) so far in 2008, with funds losing much of the growth they enjoyed last year prior to the onset of the financial crisis.<\/p>\n
The news gets still worse in terms of share prices in funds of hedge funds – which are seven% down on the year.<\/p>\n
Increased market volatility is thought to have cancelled out the advantages invested in listed hedge funds enjoy, such as having a permanent base of capital.<\/p>\n
Speaking to the news source, Simon Elliott, head of research at Wins, commented: "Performance across the board has been disappointing this year and the difference between NAV and share price performance gives you an idea of how premiums have evaporated and discounts widened.<\/p>\n
"They have held up pretty well in NAV terms, but investors are exposed to the share price and it makes a big difference to returns." <\/p>\n
Editing by Alex Akesson<\/p>\n