Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Six in Ten Hedge Funds Lost Money in 2011

Adam Gault | Getty Images

It’s not just the big Wall Street firms that are having dismal years and slashing bonuses.

Nearly 60% of hedge funds lost money in 2011, according to preliminary data from the HedgeFund Intelligence Database.

Asia-based funds suffered the worst performance, declining 5.70 percent, according to the database. Japan’s devastating tsunami and nuclear disaster might have contributed to this. European funds declined 2.45 percent. US funds lost just 0.50 percent.

Fund of funds lost 5.04 percent.

Overall, the Hedge Fund Intelligence Database composite index shows a decline of 1.91 percent for the year.

Only about thirty-one percent of the funds tracked in the database have reported their results, which could mean the final tally of losses is even greater.

Since most hedge funds charge fees based on assets under management and profits, these losses will mean that compensation will drop significantly in the hedge fund world. Many will have to struggle next year just to get back to flat because they must “carry forward” losses before they can start charging fees on trading profits.

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