A number of hedge funds are suffering big losses in the first week or two of October as equity markets have experienced their highest levels of volatility in a couple of years. So far this month, the Standard & Poor’s 500 is down about 5.6 percent, and the Nasdaq Composite index is off 6.2 percent.
One of the firms whose funds are faring badly so far in October is London-based equity-focused manager Lansdowne Partners. The firm tells clients most of its hedge funds are down between 3 percent and 5.5 percent this month through October 10. For example, the Lansdowne Global Financials Fund is off 3 percent so far this month, extending its loss for the year to about 16.7 percent, depending on the currency class. This is clearly Lansdowne’s worst-performing fund this year.
In addition, the Lansdowne Developed Markets Strategic Investment Fund has fallen about 3.5 percent this month through October 10. It entered the month at virtually break-even. The Lansdowne European Equity Master Fund is down about 3.9 percent for the month and between 9.2 percent and 10.5 percent for the year, depending on the currency class. The Lansdowne European Long Only Fund has lost about 5.5 percent for the month and 7.5 percent for the year.
There is one bright spot for the firm. The Lansdowne Developed Markets Fund is down only about 0.2 percent for the month and remains positive for the year, up about 2 percent or so.
Equity-focused funds aren’t the only losers this month. Elsewhere, Robert Citrone’s Discovery Global Opportunity Fund, a global macro fund managed by his South Norwalk, Connecticut-based firm Discovery Capital Management, has lost 6.96 percent this month through October 10, according to an e-mail message sent to clients. This more than doubles its loss for the year, to 13.28 percent.
Meanwhile, London-based Brevan Howard Asset Management’s BH Macro fund lost 1.57 percent this month through October 10, putting it back into losing territory for the year by 0.7 percent. However, the firm’s BH Credit Catalysts fund is holding its own, losing just 0.57 percent for the month through October 10. As a result, it remains profitable, up 4.84 percent for the year.
At least one fund is making money this month. London-based BlueCrest Capital Management’s BlueTrend fund made money for the second consecutive month. As a result, the computer-driven macro fund is up 0.68 percent for the month, through October 10. For the year, the fund is up 11.28 percent, once again proving that the trend followers and commodity trading advisers are mostly noncorrelated to the stock market and a safe haven during downdrafts. BlueCrest announced earlier this year that it plans to spin off BlueTrend into a new firm, Systematica Investments, which will be led by Leda Braga, BlueCrest’s head of systematic trading.
