Hedge funds

Hedge-fund managers, those ‘masters of the universe’, are struggling. They have not made any money so far in 2010 after the worst second-quarter performance in a decade. With all the macro-economic volatility and issues within the euro-zone, one would have thought hedge funds would be in their element. Instead, they have scaled back trading after bad losses amid sometimes vicious crosscurrents in stock, commodities and other markets. . For example, one of the Paulson funds lost 12% in June alone. Man Group has seen an outflow of c$1bn from their hedge funds. Outflows from the sector will continue as trustees cannot justify paying 2% management fees for zero returns and 50% correlation with equity markets.