Tokyo: Hedge funds worldwide fell in March amid the global credit crisis that toppled Bear Stearns Companies Inc. and caused asset write downs and losses at the world’s biggest financial firms, according to Eurekahedge.
Hedge funds are mostly private pools of capital whose managers participate substantially in profits from their bets on whether the prices of assets will rise or fall.
The Eurekahedge Hedge Fund Index, which tracks the performance of 2,088 funds that invest globally, fell 1.9%, based on preliminary figures from the Singapore-based hedge fund research and publishing company. The index, down 2.1% this year, rose 2.5% in February.
Concern that the US economy, the world’s largest, may be slipping into a recession weighed on global stock markets, pushing the MSCI World Index down 1.3% in March.
Asset write downs and credit losses stemming from the collapse of the US subprime mortgage market at the world’s largest banks and securities firms have reached $245 billion (Rs9.8 trillion).
“The market was all over the place in March on the back of renewed credit concerns,” said Hiromichi Tsuyukubo, who helps manage about $500 million at Tokyo-based hedge fund Myojo Asset Management Japan Co. “We’re still in a difficult time.”
Managers who trade futures, known as commodity trading advisers, or CTAs, were the only ones to post positive returns across all regional mandates, according to Eurekahedge. Managers of hedge funds investing in North America were the best performers, in part because of gains from bets against the dollar, Eurekahedge said.
The Eurekahedge North American Hedge Fund Index lost 1.1%.
The index tracking European hedge funds declined 1.4% as concern the US economy faces a recession and weakness in European credit markets weighed on investor sentiment, the report showed.
Stock declines in Hong Kong, China, and India dragged the Asia Ex-Japan index down 3.9%, and the Eurekahedge Japan Hedge Fund Index fell 3.4%, according to Eurekahedge.