Worst-performing hedge funds of the year revealed
Hedge funds run by Odey Asset Management and Fortress Investment are among some of the worst performing this year, with the Greek crisis, China’s stock market rout and uncertainty over US monetary policy catching many large managers off guard.
The €2.7bn Odey European fund, run by Crispin Odey, the billionaire financier, is the third-worst performing hedge fund of 2015, down 14.8 per cent to mid-July, according to analysis of 500 funds compiled by HSBC’s Alternative Investment Group.
New York’s Fortress Investment also featured in HSBC’s list of the 20 worst-performing hedge funds, with its $1.2bn Macro fund down 10.6 per cent to the end of June.
Both hedge fund companies declined to comment. In a letter to investors in April, Mr Odey described the fund’s performance that month as “bloody”, adding: “Nobody likes looking foolish. Nobody likes losing money.”
Alper Ince, managing director at Paamco, a California-based fund of hedge funds with $9.5bn of assets, said many trend-following hedge funds — also known as managed futures funds or commodity trading advisers — have struggled this year.
Many of these funds, which make bets across currencies and interest rates based on the direction of the global economy, unsuccessfully shorted the euro against the dollar in the expectation that the US Federal Reserve would raise interest rates, according to Mr Ince.
“People are now scratching their heads as to whether the Fed will be as aggressive as [was anticipated] earlier in the year,” he said.
Trend-following funds suffered their worst month of performance since July 2008 in June, down 2.4 per cent, according to HFR, a data provider. HFR attributed the drop to a sharp fall in China’s stock market and an escalation of the political crisis in Greece.
Overall, CTAs were down 0.2 per cent to the end of June, significantly underperforming hedge funds generally, which have made 3.36 per cent, according to Barclay Hedge, the data provider. The S&P 500, meanwhile, is up 3.25 per cent in 2015.
David Walker, a director at Cerulli Associates, the research company, said: “The degree of underperformance versus equity markets this year may disappoint some clients, who can put their money to work in a rising share market very cheaply.”
The worst-performing fund this year is the HiQ Invest Market Neutral fund, which is down 17.62 per cent to the end of May.
Amsterdam-based asset manager HiQ Invest did not respond to requests for comment. The fund’s assets nearly halved, to $45m, since January.
“It will be difficult for them to recover,” Mr Ince said.
Four of the seven best-performing funds so far this year are focused on China.
The $118m China Focus fund, run by Quam, the Hong Kong asset manager, is up 30 per cent to mid-July, while Shanghai-based Greenwoods Asset Management’s $2.1bn Golden China fund is up 20.2 per cent.
Anthony Lawler, portfolio manager at GAM, the Swiss fund house, said Chinese funds could suffer a reversal in performance following last month’s stock market slide, which caused more than half of the country’s 2,808 listed companies to suspend trading.
He added that July has been a “very positive” month for trend-following funds after Greece moved towards resolving a stand-off over debt repayments with its creditors. “CTAs have made meaningful ground back,” he said.