From istockanalyst: Some may find this a bit surprising. The
magnitude of losses experienced by hedge funds on average during the height of
the Eurozone crisis in 2011 was as large as the losses the industry witnessed
during the financial crisis in 2008.
But unlike the performance after the financial crisis, the
industry has been unable to shake the 2011 losses. Since the 2011 shock, hedge
funds have been trending sideways for over a year now. Managers continue to
find it extremely difficult to position themselves in response to the Eurozone
madness. Many became short the various risk markets (or went into cash) this
past summer and got hurt by Draghi's action in late July.
Numerous funds got involved in sovereign CDS - long
protection - and took losses as CDS tightened. Being short going into QE3 did
not help either. Also a number of equity funds got hurt by a sharp sell-off in
technology recently. The declines in commodities and emerging markets earlier
in the year caused some funds to underperform as well…..
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