Hedge Funds

Like many large banks on wall street Goldman Sachs offers several hedge funds. A few of these took big losses this summer and in one case with the Goldman Global Opportunities Fund the firm had to inject $3B into the fund to keep it running ($2B of their own money). "Given the market dislocation, the performance of GEO has suffered significantly," Goldman said. "Our response has been to reduce risk and leverage." In other words their losses mostly came from using too much leverage in the first place.

"Many funds employing quantitative strategies are currently under pressure as recent conditions have resulted in significant market dislocation," Goldman said. "Across most sectors, there has been an increase in overlapping trades, a surge in volatility and an increase in correlations. These factors have combined to challenge many of the trading algorithms used in quantitative strategies. We believe the current values that the market is assigning to the assets underlying various funds represent a discount that is not supported by the fundamentals."

Other Goldman Sachs Hedge Funds

The two other funds that have recently come under fire include the multi-strategy fund Global Alpha and the North American Equity Opportunities Fund (NAEO). Goldman has said "The market dislocation impacting equity quantitative strategies has adversely affected NAEO's performance and has been a key contributor to Global Alpha's disappointing performance. We have reduced risk and leverage in these funds as well. At their current levels of equity capital, we believe the funds are positioned to actively pursue market opportunities."

Will Goldman Sachs Leave the Hedge Fund Business?

Never. Doesn't listen to journalists who predict Goldman's flagship fund going down in flames as an end to their play in this industry. The most recent trend with Goldman Sach's strategy towards hedge funds has been to invest and take partial ownership in dozens of medium to large sized hedge funds. This allows them to help grow these hedge funds while also participating in the upside of a diverse ray of hedge fund managers and strategies.

The Richard Wilson Hedge fund Blog (http://richard-wilson.blogspot.com) is a content rich source for hedge fund industry white papers, trends, articles and professional interviews. I also share lessons I learn in my investment marketing and sales (third party marketing) career and earning a graduate degree at Harvard. I live in Cambridge, MA and can be reached at 503.789.7901 or Richard@RichardCWilson.com. This post came from the Richard Wilson Hedge Fund Blog online at: http://richard-wilson.blogspot.com/2007/10/goldman-sachs-hedge-fund.html

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China Hedge Fund Industry Trend

As their capital markets become stronger and more mature the average person in China is saving 15% more of what they earn every year. Equities have been on a rally increasing almost 75% so far in 2007 but eventually the market will be mature enough and equities growth outlook choppy enough that diversification into alternative assets will become more important. If you are a hedge fund there may be opportunities to sell and market your products through Chinese-based but American owned banks or financial networks. The WSJ reports that in 2006 there were over 60 hedge funds currently investing in China and according to Eurekahedge this makes up over $4B in assets.

Hedge Fund Third Party Marketing in China

If you are a third party marketer you may be able to differentiate yourself by building those relationships or traveling to China twice a year to get a lay of the land and introduce yourself to important contacts you have there. You could also find a few Chinese hedge funds and offer to represent them here in the United States. Most hedge fund managers in China do speak English but very few have full time marketing and sales support based here in the United States.

Chinese Hedge Funds Resources

The US-China Business Council has more information on statistics related to Chinese hedge funds and investors in China. Other resources include the All About Alpha blog, the hedge fund blog, Albourne Village, and the Fierce Finance newsletter. I also continue to post more articles within the Richard Wilson Hedge Fund Blog on Chinese hedge fund trends.

- Richard

Richard Wilson runs the Richard Wilson Hedge Fund Blog (http://richard-wilson.blogspot.com) He is an investment marketing/sales expert who works with hedge funds. Richard is a Harvard graduate student, author of investment sales book Rainmaker, and has 7,000 professional contacts and 800 connections on http://www.Linkedin.com Richard Wilson resides in Cambridge, MA. He may be emailed at Richard@RichardCWilson.com or called (503) 789-7901.

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