Hedge funds decline in October
Hedge funds measured by the Greenwich Global Hedge Fund Index (GGHFI) declined slightly during October, having come off their highest levels of the year.
According VanMac Global Funds Consultants, the index returned -0.47 per cent, although 46 per cent of constituent funds in the index ended the month with gains. The Greenwich Composite Investable Index (GI2) also lost 0.47 per cent during the same period.
This compares to global equity returns in the S&P 500 Total Return (-1.86 per cent), MSCI World Equity (-1.85 per cent), and FTSE 100 (-1.74 per cent) equity indices. Year-to-date, the GGHFI and the GI2 have returned 16.78 per cent and 3.41 per cent respectively, while the S&P 500 Total Return, MSCI World Equity, and FTSE 100 Indices have returned 17.03 per cent, 20.20 per cent, and 13.76 per cent.
Referring to the findings of a research paper by Professor Stephen Brown of New York University's Stern School of Business, which stated that one in five hedge funds have lied or misrepresented their results, VanMac Group managing director Scott MacDonald said in the latest group newsletter that this underscores the importance of finding a trustworthy manager and having them independently verified.
“Both asset consultants and institutional investors need to become more competent at assessing trading strategies of a proprietary trading nature, and need to better understand the sustainability of those investment styles and strategies,” said MacDonald, who recently joined a panel discussion of Sydney investment managers who examined the findings.
“Good managers that survived well during this last period of economic uncertainty and high volatility are probably a good place to start looking,” he added.
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