Hedge Funds Lost $100 Billion on Investor Withdrawals
By Tomoko Yamazaki
Nov. 13 (Bloomberg) -- The global hedge fund industry lost
$100 billion of assets in October, according to an estimate from
Eurekahedge Pte, as firms including Sparx Group Co. and Tantallon
Capital were buffeted by investor redemptions.
Funds fell an average 3.3 percent in October, based on
preliminary figures from the Singapore-based data provider, as
measured by the Eurekahedge Hedge Fund Index, which tracks the
performance of more than 2,000 funds that invest globally.
The loss compares with the 19 percent slide in the MSCI
World Index last month, as managers who trade futures, known as
commodity trading advisers, or CTAs, and those who invest in
Japan helped offset declines, Eurekahedge said.
The biggest market losses since the Great Depression and
investor withdrawals hurt the $1.7 trillion hedge funds industry
that manages largely unregulated pools of capital. The index of
global funds has lost 11 percent this year, set for the worst
performance since 2000 when Eurekahedge began tracking the data.
``This wave of redemption in the hedge fund industry is
going to last for at least another six months,'' said Toyomi
Kusano, president of Kusano Global Frontier, a hedge fund
research firm in Tokyo. ``Managed futures funds are the solo
winners in this environment and hedge funds that are investing in
futures are the one bright spot in this environment.''
Sparx, Tantallon
Earlier this week, Sparx Group Co., Asia's biggest hedge-
fund manager with $8.5 billion in assets, posted a first-half
loss on redemptions and falling stock prices. Its assets under
management on a preliminary basis were 839.1 billion yen ($8.8
billion) as of Oct. 31, compared with a peak of 2 trillion yen in
August 2006.
Assets in Singapore-based Tantallon Capital's flagship
Tantallon Fund shrank to $284 million at the end of October,
according to data compiled by Bloomberg. The fund, managed by
Merrill Lynch & Co. former head of sales and Tantallon co-founder
Nicholas Harbinson, stood at $877 million at the end of August,
from as much as $1.5 billion at the start of the year.
Tantallon Capital was ranked by Alpha Magazine as Asia's
11th largest hedge-fund manager as of March 31.
In Europe, Man Group Plc, the largest publicly traded hedge-
fund manager, reported assets under management, which stood at
$70.3 billion as of Sept. 30, fell to $61 billion at the
beginning of November, the least since March 2007.
Japan Outperforms
In terms of regional mandates, the Eurekahedge Japan Hedge
Fund Index was the best performer, declining 0.8 percent last
month, even as the benchmark Topix index slid 20 percent, the
firm said. Trades that involved selling regional stocks and took
advantage of currency moves helped stem losses, Eurekahedge said.
The yen strengthened more than 7 percent against the dollar in
October.
Among Japan funds, the 2.7 billion yen Sparx Japan Stocks
Long Short Fund, also known as ``Best Alpha,'' declined 2.2
percent in October, according to monthly data posted on the
company's Web site. Gains in stocks such as Shin-Etsu Chemical
Co., the world's biggest maker of polyvinyl chloride resin and
silicon wafers, and KDDI Corp., Japan's second-largest mobile
phone operator, contributed to the performance, it said.
The Eurekahedge Asian Hedge Fund Index lost 4.3 percent.
Singapore-based Tantallon's long-short fund, which seeks to
profit from both gains and declines in stock prices, fell 28.6
percent this year through October. It was up 0.59 percent last
month, Bloomberg data show.
The Eurekahedge North American Hedge Fund Index fell 4
percent, the firm said, while the index tracking Eastern Europe
and Russia was the worst performer with a slide of 16 percent.
Astmax
By strategy, CTA funds outperformed, with average gains of
6.2 percent as managers exploited directional trends in the
commodity and currency markets, the firm said. Similar trades
also helped boost the performance of so-called macro-fund
managers, who wager on trends in stocks, bonds and currencies
worldwide, Eurekahedge said.
Among macro funds, Astmax Commodity Global Macro Fund, run
by former Sumitomo Corp. copper trader Tetsu Emori, rose 2.6
percent last month. The 1.4 billion yen fund, which takes long
and short positions in global commodity markets ranging from corn
and coffee to aluminum and oil, rose every month since inception
on May 12 through October, according to Emori.
The preliminary figures were based on 41.5 percent of the
funds reporting their October 2008 returns as of Nov. 12,
Eurekahedge said. For CTA managers, the performance figures were
based on 60 percent of the funds reporting, it said.
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