Stock Market Losses Bring Hedge Funds Down

Most hedge fund strategies had losses in September, evidenced by a 3.92% drop in the Barclay Hedge Fund Index compiled by BarclayHedge. The index has lost 7.45% in the 3rd quarter and is now down 6.53% in 2011.

“For the second straight month we’re seeing the largest hedge fund losses since the 2008 meltdown,” said Sol Waksman, founder and president of BarclayHedge. “Equity markets, driven by fear-based liquidation, dropped precipitously. Double-dip concerns drove the S&P 500 to a 7% loss, the MSCI Europe Index gave up 11.1% over the uncertainty of resolution of its sovereign debt issues, and the Hang Seng Index lost more than 15% as the Chinese economy appeared to slow.”

Overall, 16 of Barclay’s 18 hedge fund indices lost ground in September. The Emerging Markets Index fell 7.61%, Equity Long Bias Index dropped 6.13%, the Event Driven Index lost 3.91%, Healthcare and Biotechnology Index gave up 3.54%, Distressed Securities lost 3.33%, and the Pacific Rim Equities Index was down 3.18%.

The Barclay Equity Short Bias Index jumped 8.05% in September, following a 7.03% gain in August. The Equity Short Bias Index is up 14.34% year-to-date.

“Short sellers once again were able to capitalise on the lack of confidence that current economic concerns can be resolved in a timely and effective way,” said Waksman.

The Barclay Fund of Funds Index lost 2.78% in September, and is down 5.78% year-to- date. “After several off years, funds of hedge funds successfully demonstrated their ability to use diversification to contain downside risk and outperform hedge funds in a down market,” concluded Waksman.


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