Hedge funds feel the pain

Reuters reports that hedge funds, considered the stalwarts of the investing world, are feeling the pain just like everyone else.
The losses triggered by Europe's debt crisis and the downgrade of America's triple-A credit rating are not expected to be as damaging as the 2008 financial crisis, but they are sure to be very deep and could make 2011 very difficult for the $2 trillion (1.22 trillion pounds) hedge fund industry.
The pain is expected to be widespread across strategies with only so-called short sellers, who bet exclusively on market declines, and some global macro players, who make large calls on currencies and interest rates, being able to boast about gains, investors and managers said.

"The better hedge fund players were fairly defensive and that means you are going to end up sitting on a lot of cash," Campagna said.

For most managers the first seven months had already been hit or miss as the U.S. economy failed to recover as quickly as many had hoped and Europe's debt crisis worsened. So even the small gains nursed by big hedge funds like Dan Loeb's Third Point, and others at the end of July, are likely to have vanished in the first few days of August…
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Read more about this at http://www.reuters.com/article/2011/08/09/uk-hedgefunds-losses-idUSLNE77802E20110809