Sounds like an option writing fund that doesn't know how to hedge its risk, I would dump it ASAP especially in this volatile market. If it was a trend following fund I might be inclined to stick with it but the 2% monthly return gives it away.
That's quite a hefty drawdown. In my own trading, I use a moving average of my system equity to tell me when to stop using a trading system. I suppose you could do the same thing with a hedge fund's equity. I would research another fund with better pain/gain ratio. You said they experienced a 50% DD before? That's way to much when trading with other people's money. 20% DD's usually get investors up in arms. At 70%, they're likely to see redemptions and then shut down. Move on. D
Sell the POS what when they are at 80% drawdown you will be back on here asking the same question. Yes give yourself a stop at 95% drwawdown so you can still have enough $ to buy a pizza. Get out of the POS.
70% is not a drawdown. it's a freaking train wreck. so what kind of stuff does this hedge fund get into?
No, not running the fund. The fund lost 50% in a month selling puts. I am doing much better in my own trading account. I was trying to diversify my invesments by investing with other managers.
Originally I wrote: "1) Find out WHY they're down; ie, bad trades, bad investments, bad timing? etc. 2) Find out what they are/were invested in. (waiting for a stock to bounce or flat and in cash)." THEN, I read your post about the 0.62%/month avg. return!!! If 0.62%/month is avg, and they're down 70%, like you said, it'll take forever to regrow the capital. In desperation, they'll likely "swing for the fences" as someone else mentioned-- which could easily blow them up if wrong. I'd get the h-ll out now.
Well surprise surprise... Since the high water mark on the original fund is basically a lost cause, why not start all over again with a new fund and rake in incentive fees from the very get go! No one's the wiser....