2008 was a bad year for pressured hedge funds
GLOBAL - Almost all hedge fund strategies posted their worst losses in 2008, according to a report by French business school Edhec.
Edhec said only the commodity trading adviser (CTA) funds and the short-selling strategies posted positive returns and came close to their best annual returns since 1997.
The best performing strategy was short-selling, with a positive return of 24.72%, while emerging markets obtained the lowest return of -30.30%, closely followed by convertible arbitrage returning -26.48%.
The funds of hedge funds index, sometimes taken to give an aggregate view of the industry's performance, posted a negative return for the first time since 1997 of -17.08%.
The news comes as Swiss bank UBS today predicted there would be a 35% decline in hedge fund assets from their peak in 2007.
The research has also been published not long after Christine Lagarde, the French finance minister, called for tighter regulation of hedge funds and highter capital requriements on banks with ‘risky' hedge fund clients.
Lagarde, who would like the EU to exert more control over hedge funds via prime brokers, presented her plans to the G7 finance minister in Rome last Friday.
Jérôme de Lavenère Lussan, managing director of hedge fund consultancy Laven Partners, commented new regulation for hedge funds is "not the answer".
A recent IPE study revealed almost three-quarters of surveyed pension funds expect to see a negative net-of-fee performance of more than 5% on their hedge fund investments for 2008. (See IPE story: Pension funds expect hedge fund losses)
Within the remaining quarter of 73 respondents to the survey, pension fund officials said the expected returns for 2008 was evenly split between -4.9% to 0% and 0.1% to 5%.
If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on + 44 (0)20 7261 4622 or email email@example.com