Russian-Focused Pharos Funds Fall (Again) In October

Date: Monday, December 1, 2008
Author: FINalternatives

Pharos Financial Group’s tri of hedge funds fell again last month amid the continuing sell-off in the Russian equity market.

During the month, the Pharos Russia Fund was down 12.9% (-36.4% YTD), the Pharos Gas Investment Fund was down 12.8% (-32.0% YTD), and the Pharos Small Cap Fund was down 27.4% (-46.6%). Meanwhile the MSCI Russia Index was down 35.3% in October and -65.6% YTD.

“October was the fifth consecutive month of losses for the RTS Index, and its 36% loss was the third worst month in the history of the Russian market after August 1998 (-56%) and May 1998 (-39%),” wrote Peter Halloran, founder. “Commodity prices continued to plummet during the month as demand destruction became apparent in both developed and emerging markets.  OPEC cut output targets at the end of the month, but oil prices continued to languish as demand very clearly has been impacted in developed markets.”

Overall, Halloran said the Russian government has been extremely proactive during the crisis with its announcements of financing and stimulus packages. Thus far, the government has made more than $200 billion available to the banking sector.

“The nearly $500 billion of surpluses built up over the last eight years give Russia the capacity to aggressively counteract the effects of this global crisis. And despite a slow start getting some of these programs implemented, it is clear that the government will use these resources as needed,” he said.