Global Alpha falls 26pc in '07
Sunday, 12 August 2007
CONNECTICUT, Aug 11 (Bloomberg): Goldman Sachs Group Inc.'s $8 billion Global Alpha hedge fund has fallen 26 per cent so far this year, a decline that may prompt more investors to withdraw their money, according to people familiar with the fund.
Goldman's largest hedge fund, managed by Mark Carhart and Raymond Iwanowsk, has dropped almost 40 per cent since July 31, 2006, said the people, who declined to be named because the fund is private. The Standard & Poor's 500 Index of the biggest US stocks has returned 16 per cent during the same period.
``It's hard to imagine how investors can maintain confidence, because their losses have been taking place over a long period of time, starting last year,'' said Virginia Parker, who helps oversee about $1.8 billion at Parker Global Strategies LLC in Stamford, Connecticut. ``There has been a broad range of market climates, and the fund has not demonstrated the ability to excel in any of them.''
Quantitative, or ``quant,'' hedge funds in the US, including those run by Goldman, Highbridge Capital Management LLC, AQR Capital Management LLC and Tykhe Capital LLC, have lost money in August as credit spreads have widened and stock-price volatility has jumped, jarring the computer models the managers use to make their bets.
The $1.7 trillion hedge-fund industry has been roiled by declines in the credit and equities markets during the past two months. Two hedge funds managed by Bear Stearns Cos. collapsed and Sowood Capital Management LP, run by a former manager of Harvard University's endowment, is shutting down after a 60 per cent loss.
James Simons's $29 billion Renaissance Institutional Equities Fund has fallen 8.7 per cent this month, hurt by swings in securities prices, the 69-year-old said yesterday in a letter to investors. The two-year-old fund now has fallen 7.4 per cent since the beginning of January.
Goldman spokesman Peter Rose declined to comment.
Global Alpha's performance has reduced the fees paid to New York-based Goldman. The biggest US securities firm booked $700 million from the fund following its 2005 gain of 40 per cent.
Goldman's largest hedge fund, managed by Mark Carhart and Raymond Iwanowsk, has dropped almost 40 per cent since July 31, 2006, said the people, who declined to be named because the fund is private. The Standard & Poor's 500 Index of the biggest US stocks has returned 16 per cent during the same period.
``It's hard to imagine how investors can maintain confidence, because their losses have been taking place over a long period of time, starting last year,'' said Virginia Parker, who helps oversee about $1.8 billion at Parker Global Strategies LLC in Stamford, Connecticut. ``There has been a broad range of market climates, and the fund has not demonstrated the ability to excel in any of them.''
Quantitative, or ``quant,'' hedge funds in the US, including those run by Goldman, Highbridge Capital Management LLC, AQR Capital Management LLC and Tykhe Capital LLC, have lost money in August as credit spreads have widened and stock-price volatility has jumped, jarring the computer models the managers use to make their bets.
The $1.7 trillion hedge-fund industry has been roiled by declines in the credit and equities markets during the past two months. Two hedge funds managed by Bear Stearns Cos. collapsed and Sowood Capital Management LP, run by a former manager of Harvard University's endowment, is shutting down after a 60 per cent loss.
James Simons's $29 billion Renaissance Institutional Equities Fund has fallen 8.7 per cent this month, hurt by swings in securities prices, the 69-year-old said yesterday in a letter to investors. The two-year-old fund now has fallen 7.4 per cent since the beginning of January.
Goldman spokesman Peter Rose declined to comment.
Global Alpha's performance has reduced the fees paid to New York-based Goldman. The biggest US securities firm booked $700 million from the fund following its 2005 gain of 40 per cent.