Top Talent Continues to Flock to Hedge Funds
Hedge Funds had the best returns in nearly two years in October. In fact, hedge funds this year could meet or beat 2003 when the Greenwich Global Index reported the asset class was up more than 18%, according to Ben Rossman, senior vice president of Greenwich Alternative Investments. This could be one reason why top talent has been flocking to hedge funds. Executive search firm, A.E. Feldman, says that hedge funds continue to challenge top firms in their quest for talent. A recent report in the New York Times suggests that the allure of hedge funds is understandable given their “giant paydays, more malleable cultures and notably less bureaucracy.” A.E. Feldman adds that hedge fund jobs are increasing as growth in assets under management continues to pad demand for personnel. Need persists for alternative investment professionals who have a comprehensive understanding of the risks and benefits of the various asset classes and investment strategies
Hedge funds returned 3.01% in October, the strongest month since last January, according to the Greenwich Global Hedge Fund Index. The index, which is released on a monthly basis by Greenwich Alternative Investments, also increased 12.75% year-to-date, marking the best performance for the first 10 months of a year since 2003. The Credit Suisse/Tremont Hedge Fund Index, which tracks 486 hedge funds, posted similar results. It was up 3.16% in October - the largest one-month return of the year.
It was a stellar month for hedge funds of every strategy, says Rossman. Each of the 18 hedge strategies tracked by the Greenwich Global Index was up last month. October saw rallies in equities markets, thanks in part to the Fed’s decision to cut interest rates for the second time in two months, according to a report in HedgeWorld. The report quotes Oliver Schupp, President of the Credit Suisse Index Co. Inc, as saying, “Overall, this market environment led to the majority of hedge fund sectors ending October on a positive note.”
Emerging markets led the pack. The Greenwich Global Index’s specialty trading group, which includes emerging markets managers, as a whole returned 3.63% for in October (18.36% YTD). Specifically, emerging markets managers reported monthly returns of 4.59% (24.6%.YTD). “Emerging markets are booming thanks in part to an increased confidence by investors, and to new regulations in countries such as China allowing additional levels of foreign investment into local products,” says Rossman.
The long-short equity group reported October returns of 2.92% (13.24% YTD). That group was led last month by both aggressive growth (up 3.97%) and opportunistic strategies (up 3.99%). The Credit Suisse Tremont Hedge Fund Index reported similar results. Managed futures funds were also top earners, gaining 4.06% in October, though this was down from their 5.13% return the previous month. Multi-strategy funds earned 3.02% (11.71% YTD). Event-driven funds returned 2.91% and global macro funds gained 2.72%. Convertible arbitrage was up 2.18% in October. Equity market neutral was also up 1.5%.
Rossman says he anticipates continued positive performance for hedge funds. “What I like about the remaining months of the year is that there seems to be a general confidence out there, coupled with a good job in the fixed-income space of absorbing losses.”
