Quote:
Originally Posted by italkcash
Hedge Funds around the world, offshore as well as non offshore Hedge Funds are playing a mayor role in the financial situation and are feared by governments as well as mayor banks. With a combined value of more than 4 trillion Euro's, Hedge Funds are having a great deal to say in the current financial crisis.
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Not surprising. Hedge funds worldwide manage a combined $1.3 trillion, more than double the amount they controlled five years ago (according to Hedge Fund Research Inc. in Chicago.) Returns last year (2007) averaged 13 percent, led by emerging-market funds, the best annual performance since 2003.
There have been many falls as well in 2007, resulting even in disappearances of some . Raptor Fund lost 9% in July; Sowood Management LP said July 30, 2007 that it lost $1.5 billion and Caxton Global Investments, an $11 billion fund, held on to a mere 3.5% gain for the year through July.
The losses by large funds add to the market volatility that has been caused by credit markets tightening due to subprime mortgages in default. Their losses add to the uncertainty, adding to the volatility of the market. The issue right now seems to be that too many hedge funds are not currently hedged.
Many of the losses in Hedge Funds were reckoned to be due to use of leverage.
