With the S&P down just about 10% YTD, hedge funds especially of the levered-beta variety have not had a good year; that said, it would be fair to say that many have not had a terrible year either. In fact, as the following table of hedge fund performance by some of the most marquee names shows, while there are certain outliers in the YTD column some 6 weeks into 2016, most of the hedge funds have actually done that, and while most are around the flatline, there are some notable outliers, perhaps most notably Boaz Weinstein Saba which late last year many had left for dead.
First, here are the top 20 best and worst hedge funds of 2016 as of February 12 according to HSBC.
Next, below is a summary of the performance by some of the marquee hedge fund names for which we have data:
Finally, the reason we have bolded the performance of Blackrock’s Obsidian fund, the asset manager’s global credit hedge fund, is because as Bloomberg reports it is off to its worst start in its 19-year history. The Obsidian fund sits within the $4.6 trillion money manager’s $32 billion hedge fund unit, which runs about 30 strategies. The fund started trading in July 1996, making it the unit’s oldest strategy.
More details from Bloomberg:
The flagship $1.9 billion Obsidian fund fell 4 percent in January after failing to anticipate “the extent to which markets would trade in lockstep with commodities,” according to an investor update, a copy of which was obtained by Bloomberg. The fund lost money from corporate credit and global-rate strategies.
Obsidian, led by Stuart Spodek, entered this year betting that investment-grade company debt would benefit from growth in the U.S., a “shallow trajectory for Fed hikes” as well as the European Central Bank’s monetary policy. Instead, fears of a global recession and a further decline in oil prices weighed on markets. A Standard & Poor’s report last month showed the outlook for corporate borrowers globally was the worst since the financial crisis.
“While we believe these recessionary fears are inconsistent with current fundamentals and our expectations for forward fundamentals, we underestimated the sharp and broad risk aversion in response to declining oil and weakening data,” the firm told clients.
The fund made some money from bets against higher-quality energy issuers and regional banks with significant exposure to energy, according to the update.
We expect many other funds, credit or otherwise, to blame underperformance on recessionary fears despite “declining oil and weakening data”, until either they are shut down, or the snapback in cognitive dissonance is aided and abetted by the NBER which eventually admits that the recession arrived some time ago.
via Zero Hedge http://ift.tt/1O6Mtfg Tyler Durden