No benchmark. Benchmarks are for mutual funds. Absolute positive returns on a risk adjusted basis are the goal for most hedge funds and global macro funds in particular. You get a hard on because a highly successful fund is going through a hard period. What is the motive of your schadenfreude? The fund is closed to new money since well over two years AFAIK, the GS partners alongside big institutionals are heavily invested (i.e. no little retail folks like you and me are getting "hurt") and it performed brilliantly over the last 8 years. Why the excitement on your end? I don't get it.
1) The best about this article is Buffet´s rule : No. 1: Never lose money. No. 2: Donât forget ! 2) You are interpreting too much weight to Carhart´s and Iwanowski´s former success. We all know about fund managers´ Achilles heel : in the first couple of years superior performance and then only meager results. Period 2002 - 2005 has been a remarkable time for them. Agree and my congratulations ! 3) A quote in the article underscores my assumption : "For Carhart and Iwanowski, a second down year, especially a double-digit loss, could be trouble. âIf youâre down significantly for two years in a row, itâs likely that an investor will be reconsidering an investment,â says Theodore Aronson, principal of Aronson + Johnson + Ortiz LP, a Philadelphiabased investment firm, which has $28.3 billion in assets under management."
Its called 'hammer and anvil'...sure the fund is down, it buys the product churned out by the IBank which last I checked made tens of billions of dollars on the packaging/placement fees. Periodically the fund takes a loss leaning on a position, whilst the GS prop desk, and or key primebrokerage clients take the other side, the fund eats the loss and the prop desk prints money, all the while the sales desk makes the vig, eventually the prop desk leans one way and takes a loss...allowing the fund traders to step in with a contra trade and they print money. Meanwhile back at the ranch the fund buys assets that keep key client relationships of GS satisfied. Global Alpha is a different breed of hedge fund, the return calculation needs to consider benefits to the IBank. Viewed from the Chairman's perch and it all works out just fine.
Do I understand you right ? The fund as kind of sacrificial lamb for the IB and some key primebrokerage clients, or ?
It is a tool in the arsenal, thats all...nothing sinister. Wall Street's 'Chinese wall' between Corporate Finance and Trading is more like the 'US Mexico border' .
to GS's defense maybe they are betting that the current low volatility world is going to end and spreads will explode. being down a few percent while that doesnt happen is not awful as some of you think, when it finaly happens their returns will explode though