Hedge funds post modest losses in November

Date: Tuesday, December 9, 2008
Author: James Langton, Investment Executive

Gains in Global Macro and Managed Futures sectors help offset losses from other sectors.

Gains in Global Macro and Managed Futures sectors help offset losses from other sectors

Hedge funds likely lost less than 1% in November, according to early estimates from the Credit Suisse/Tremont Hedge Fund Index.

The index is expected to finish down approximately 0.71% in November (based on 69% of returns received). Credit Suisse Tremont Index LLC notes that continuing downward trends in U.S. Treasury yields, commodity and currency markets led to positive performance for the Global Macro and Managed Futures sectors and helped mitigate the losses from other sectors.

Managed Futures was the best performing sector in the index, it reports, finishing the month up an estimated 3.2% (with 90% of funds reporting). In addition, three other sectors appear to be ending the month in positive territory: Dedicated Short Bias, Equity Market Neutral and Global Macro.

“The continued commodities bear market benefited the Global Macro and Managed Futures sectors as short positions in the commodities sector led to gains for the month. Oil prices dropped below $50 a barrel from October highs, and were down almost $100 a barrel from previous levels this summer,” it notes.

Also, it points out that yields on 10-Year Treasury bonds dropped to record lows, falling below 3% in November. “Some analysts currently forecast a further decline in yields if the U.S. Federal Reserve lowers interest rates in December as expected. If Federal Reserve efforts to improve market conditions by providing liquidity for asset-backed securities through the Term Asset-Backed Securities Loan Facility are successful, a possible investment shift from treasuries to other securities could begin to create opportunities in the Relative Value sectors as well,” it adds.