S&P says fund of hedge funds have been very successful at protecting investors from significant losses and S&P-rated funds of hedge funds have generally delivered positive returns during the first half of this year.
S&P fund analyst Randal Goldsmith says: “Our rated fund of hedge fund managers have done well so far this year despite the turmoil in equity and fixed income markets. Examples of funds of hedge funds, as opposed to individual hedge funds, getting into trouble are extremely rare.
“A number of the funds we rate have invested in short-biased credit funds, which have benefited from falling values in the US debt markets – Thames River, Absolute and RMF are some examples.
“They have generally maintained or increased their exposure to short-biased credit, which should see them continuing to do well in the more turbulent market conditions of the second half of the year.”