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Saturday, December 4, 2021

HF Closures To Continue


Date: Wednesday, June 4, 2008
Author: Emii.com

The rate of hedge fund closures increased significantly last year and is expected to rise further, reports Financial News, citing one of the industry’s largest investors.

Laurent Seyer, ceo of Lyxor Asset Management, a subsidiary of French bank Société Générale that operates a platform through which clients can invest in 150 hedge funds, said that 30 of those funds closed last year, compared with an average of 15 a year over the past five years.

Hedge funds included on the platform have to agree to let Lyxor’s clients remove their capital at less than a week’s notice, making the platform an early indicator of investor sentiment.

Seyer said investors have been particularly unenthusiastic about hedge funds that trade in asset-backed securities and some have sold the most liquid assets in their portfolio in order to reduce leverage.

Where Lyxor has responsibility for choosing hedge funds in which to invest its clients’ capital, it has made money this year, despite the difficult market conditions that have left many hedge funds floundering.

The industry made one of its worst starts to a year since records began, with significant losses in January and March. It has begun to recover since, making money in April and May, according to U.S. data provider Hedge Fund Research, whose investable hedge fund index was down just 0.14% for the year to May 28, the most recent data available.

Hedge funds following a relative value arbitrage strategy, which typically take long and short positions in credit securities and their derivatives, have fared worse than any other strategy this year, losing 6.4% of their value for the year to date.