Asian Hedge Funds Lost Money In March

by Phillip Morton, Investors Offshore.com, London

29 April 2003

Asian hedge funds typically lost money in the month of March according to recently published figures from the Bank of Bermuda.

In a particularly turbulent time for most markets, many hedge fund mangers have trimmed their market exposure significantly to protect themselves against sudden, unpredictable politically driven swings which accounts for much of the relatively poor performance of the funds.

According to Reuters, some of the worst losses in March were experienced in the categories tracked by the Asia Hedge fund index, such as Asia ex-Japan funds which declined 1.76 per cent during the month. In general, hedge funds concentrating on Asia were down 1.50 percent last month though this was an improvement on the MSCI Pacific free net index which contracted 3.07 per cent in March.

Bucking the trend were Australian long/short equity funds which managed to return a meagre 47 basis points, though this lagged the Australian All Ordinaries Index 2.52 per cent gain in March.

Meanwhile, numbers released by the CSFB Tremont hedge fund index revealed that funds globally were mostly static with average returns of 26 basis points.

Whilst hedge funds performed relatively poorly, stock markets posted more solid gains in March, with major US benchmarks the S&P 500 and the Dow Jones Industrial Average gaining 0.84 per cent and 1.28 per cent respectively.

Amongst the worst hit sectors were trend-following managed futures, some of which suffered double digit losses against the backdrop of the US invasion of Iraq.

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