Renaissance Quant Fund, Goldman Subpoena, Asian Hedge Funds

Prosecutors Subpoena Hedge Funds In Goldman CDO Probe (FINalternative)
The Manhattan District Attorney’s office has subpoenaed several hedge funds that invested in collateralized debt obligations marketed by Goldman Sachs. The D.A.’s office has expanded its inquiry, begun three months ago following a U.S. Senate subcommittee report that blasted Goldman’s handling of CDO deals prior to the economic crisis. In addition to the hedge funds, other investors in the CDOs, notably Morgan Stanley, have received subpoenas in recent weeks, The Wall Street Journal reports.

Goldman Sachs Group Inc (NYSE:GS)

Asia Hedge Funds Outperform Global Peers in August Rout (Bloomberg)
Asian hedge funds beat global peers in August as Europe’s deepening sovereign debt crisis and Standard & Poor’s cut to the U.S. credit rating sparked the worst month for the industry in almost three years. About 80 Asia-focused hedge funds reported an average 2 percent decline and median loss of 1.5 percent last month, according to data from Credit Suisse Group AG’s prime brokerage unit. Hedge funds worldwide lost on average 3.5 percent, the worst month since October 2008, according to Hedge Fund Research Inc.’s HFRX Global Hedge Fund Index.

Big hedge funds are getting slaughtered (CNNMoney)
In a global market roiled by uncertainty, there’s one bet that’s becoming increasingly likely: several big hedge funds will face steep losses before the year is through. There’s no way for retail investors to short hedge funds or profit from their losses. But there are seemingly limitless ways to get burned by the industry’s omnipresence throughout the financial system. Hedge funds now manage $2.04 trillion globally. That’s the most amount of money ever in the industry’s history, according to Hedge Fund Research’s June 30 figures. “Because hedge funds are expected and incentivized to take on a broad variety of risks, they can get killed during bad times from market turmoil and dislocation,” says Andrew Lo, the director of MIT’s Laboratory for Financial Engineering. “They’re tremendously valuable as early warning indicators of oncoming distress.” Overall hedge fund performance has mimicked drops in the equity markets. The Dow Jones Credit Suisse Core Hedge Fund Index was down 3.76% as of August 31 compared to a 3.1% drop in the S&P 500 index.

Wealthy Investors Keep Paying Hedge-Fund Fees Even With ‘Anemic’ Returns (Bloomberg)
Almost half of Leslie Quick’s personal portfolio is dedicated to hedge funds, a position he’s increased this year even as the lightly regulated asset pools have returned less than 4 percent. “I think we’re coming into a period where stock picking will be richly rewarded after returns that were anemic,” said Quick, 58, a founding partner of Morristown, New Jersey-based Massey, Quick & Co. LLC, an investment advisory firm with about $3 billion in assets under management. “When the volatility really started about a month ago, I walked away from the office with a real sense of calm.”

Renaissance Quant Fund Adds to Gains (WSJ)
Renaissance Technologies LLC’s quantitative hedge fund Renaissance Institutional Equities Fund was up a gross 5.4% in August, bringing the $6.5 billion fund’s year-to-date gains to 25.56%, a person familiar with the situation said Wednesday. The strong gross return by the Renaissance fund—gross gains exclude the impact of fees and expenses paid by investors— shows that in a difficult month for hedge funds, some still managed to eke out gains. The S&P 500 fell by 5.70% last month, leading to a 3.47% drop among hedge funds, according to preliminary data by the Hedge Fund Research.

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