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The sector of hedge funds struggled in the last few years, but now it is posting profits. Alan Howard posted 44 per cent profits in the year in May, and the fund by Dharmesh Maniyar, was up by 13 per cent. Howard got 37 per cent rise in May in AH Master Fund, which is a risky fund.
Head of investments with Mercer, Paul Kenny, explained about these absolute return funds which are highly complicated for investors to handle themselves. Macro hedge fund is an absolute return fund, describe by some as the funds to protect the capital value of assets. These are uncorrelated to the fixed income market and fall less when the market is stressed. These are multiple strategy funds driven by global market data and trading information; and it involves many long and short hedge funds.
Macro hedge funds investment is based on changing economic policies and capital flow across the globe. Systemic risks are involved and it includes interest rates strategies, currency strategies and stock index. There have been some leading gains in the sector where traders believe five month gains will not determine their proceeds but in a volatile market where investors are worried about the trade wars between China and the US, and the change in polities in Europe, the results are encouraging.
Howard made short positions in Italy where the trades recorded profits. Another big gainer in the market was Talpins’s Element Capital Management’s hedge funds which rallied in May by 4 per cent; the firm said the profits were reduced due to turmoil in Italy. The Jeff Talpins’s fund reported 18 per cent rise.
Some macro funds registered losses as per the data released by the eVestment. The Field Street Capital Management registered losses due to loss of Italian assets, in between, the political uncertainty.
PruLev Global Macro Fund reported a gain of 15.4 (value $144 million) per cent in May. Most market profits were disrupted by Italy election reports. Further, investors expected the rates to increase in the US. The political and economic changes and rising trade war risk raised bets in bigger macros funds, where risks are higher.
The data examined by Mercer finds investors are almost getting a lot in the past three years in such funds. About a third recorded losses, and two-third over performed. The poorest performer was Aberdeen Standard Investments GARS, which was down by 2.1 per cent in April. This fund was highly promoted in Ireland.
Most less performing funds trade on value, such as positioning in one stock to another, and the investment director of Aberdeen Standard Investments said “ the markets are challenging and we expect the investment to get at least three year time.”
Kenny suggested these funds could be assessed for a whole market cycle and investor needs to understand the risks. These funds are not directly related to traditional markets and managers need to analyze various aspects – the qualitative and quantitative aspect of investment to recommend a fund.
It is sometimes, difficult for the managers as the conditions are seismic and opaque. It is a misconception that one does not lose money in these funds. Also the past performance does not provide a sure method about the future performance.
To get information about some of the best-performing funds, click 99 Alternative (http://www.99alternatives.com).
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