Hedge Fund Drawdown

yes. I have seen it happen.

the question was "acceptable drawdown"

 

Dang!! I bet they spend alot of time changing their underwear with drawdowns like that.

 

Many, obviously not all funds will have a 20-30% drawdown stop/loss provision written into the subscription documents. When triggered the fund is suppose to fold up. If you read Cramers book when he talks about starting his fund up he speaks of how close he got to his magic number......

 

thanks for all the input! Really?! wow 70% seems like a lot. That fund must have VERY loyal investors or have them locked in for X amount of years.

ripley...exactly what kind of 'trend following' were they doing? in the futures markets?

 

'fold up' meaning cease to exist? or simply stop trading?

 

Im sorry it looks like I wasnt clear 20-30% loss from the top not 20 or 30 left ... apologies. and it is stop trading... reevaluate the strategy and see if its viable to continue or fold operations.

 

the great trend follower John Henry's funds were all down large in 2006. All but one has been down over the last 3 years.