Long On Hope, Short On Returns

Date: Friday, September 21, 2007
Author: Hedge Fund Daily

Those mutual funds that hoped to give investors the best of the traditional asset and hedge fund worlds are doing neither. Bloomberg News reports that hedge-like mutuals that employ long/short strategies not only trail traditional hedge funds, but fall far behind the Standard & Poor’s 500. For example, the JP Morgan & Chase version, the Highbridge Statistical Market Neutral Fund fell 4.7% and ING’s 130/30 Fundamental Research Fund lost 2.3% over the past three months, while the average long/short HF dropped 1.1% and the S&P 500 Index slid 0.3%. Some did even worse, such as Geronimo Financial’s Geronimo Multi-Strategy Fund, which sank 10%. “They’re touted as being revolutionary, which has us very skeptical,” Michael Herbst, an analyst at Morningstar told BN. The last quarter aside, the HF mutuals appear anemic even year-to-date. The average hedge fund climbed 6.2% through Aug. 31 and the S&P 500 grew 8%, while these mutuals have managed an average of 4.1%. The so-so performance has already prompted the closure of some. According  to BN, Geronimo has already shuttered the Multi-Strategy and the Denver-based firm may mete out a death sentence on its Sector Opportunity and Options & Income funds as well. Meanwhile, over at Schwab, the Laudus Rosenberg Global Long/Short Equity Fund is set to breathe its last Sept. 24. Though it’s being reported as a casualty of poor performance, a spokeswoman for the company says the move is due to the fact there are two other funds in the firm’s roster with similar strategies