GAM's Hong Kong-based portfolio manager Josephine Shaw says it has been a difficult year for hedge funds, or as she calls them trading funds.
The first quarter was volatile, but produced positive returns, however things were reversed in the second and third quarters of the year and returns weren’t good.
Shaw, who runs the GAM funds Tower offers in New Zealand, puts this down to an “unusual combination” of economic factors when stronger than expected US employment numbers were released.
“Markets went into a tail spin” as rates were going up faster than expected and the stockmarket went down and dollar moved.
She says some traders lost money and were worried about more losses and because conservative and then the market went through a period of low volatility and low volumes.
“A lack of trends meant people couldn’t take positions,” she says. “There was a lot of confusion and it was hard for traders.”
“They want volatility in system and there was none.”
The good news is that conditions have improved and the hedge fund managers are now making money.
“There has been a strong market rebound and performance has turned profitable,” she says.
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