Hedge Funds Missed Big July Move

An early look at July data shows that most long-short equity, multi-strategy and macro funds greatly lagged the major indexes for the month.


It looks like the stock market’s strong upward move in July caught most hedge funds by surprise.

An early glimpse at July data shows that most long-short equity, multistrategy and macro funds greatly lagged the major indexes for the month, which saw the Dow Jones Industrial average surge 7.1 percent, and the S&P 500 and Nasdaq composite soar 6.9 percent. In fact, most of the funds’ July performance ranged between up a percentage point or so to down a point.

Keep in mind that much of the hedge fund data that is in includes results only through the third week of July. I know, a lot could have happened in the month’s final week. Probably not, though, since the market’s averages were basically flat for the final five days of the month.

In any case, through July 22 or 23 — depending upon the manager — several high profile hedge funds were up less than 1 percent, including Millennium International and Bluecrest Capital International. Kingdon Offshore and Viking Capital were up a little more than 1 percent.

Another bunch of high-profile funds were down less than 1 percent, including Perry Partners, a long-short as well as special situations fund, and Louis Bacon’s Moore Global Investment and Moore Macro Managers, while Bruce Kovner’s Caxton Global Investment and Paul Tudor Jones’s Tudor BVI were each off a little more than 1 percent through July 27.

The systematic funds — quants — lost money in July. With just a few days to go, large, high-profile funds that were down included Bluetrend fund, Renaissance Institutional Futures Fund, Tudor Tensor, Winton Futures and several of Graham Capital’s funds.

A few funds, however, did seem to nearly keep up with the markets. Lee Ainslie’s Maverick Fund was up 4 percent through July 23. Of course, many funds have not reported for the month at all. Next week we’ll take a closer, more comprehensive look at July performance to see if there were some managers who participated in the market’s surprising rally.