Hedge funds profit from Facebook, oil in July

Date: Tuesday, August 14, 2012
Author: Laurence Fletcher, Reuters

Trading oil, the euro and shares in Facebook (FB.O) were among the bets to help drive gains for hedge funds in July, meaning the industry has largely shrugged off the euro zone debt crisis to make money every month so far this year.

The SS&C GlobeOp Hedge Fund Performance Index, which tracks the performance of the majority of hedge fund services provider GlobeOp's $187 billion (119 billion pounds)in assets administered, rose 1.42 percent in July, taking returns so far this year to 5.74 percent, the firm said in a statement.

Returns are shown gross, meaning they do not take account of hedge fund operators' lucrative fees, typically a 2 percent annual management charge and 20 percent of performance.

Bill Stone, CEO of SS&C Technologies (SSNC.O), told Reuters that funds have profited from a wide range of positions, both long - bets that prices will rise - and short - bets on falling prices.

"Credit funds have done pretty well in August. Oil bounced around and funds have done pretty well on both sides of that trade. In currencies the euro and the Canadian dollar have been good spots to be," he said.

"(In stocks) the biggest things that have helped long funds have been in the technology sector - Apple and Google continue to be strong and on the short side an awful lot of people made money on Facebook."

The gains mean that hedge funds have made money in every month so far this calendar year, according to SS&C GlobeOp.

The ability to make money in all market conditions was once widely seen as the preserve of the hedge fund industry, although losses during the credit crisis has changed that view.

According to Hedge Fund Research, a rival index provider, the average hedge fund gained 1.05 percent in July, taking gains this year to 2.88 percent.

SS&C GlobeOp says its index avoids so-called "survivorship bias" as funds cannot choose whether or not they report performance. The index is asset-weighted, meaning the performance of bigger funds counts for more than smaller ones.