Hedge funds are faltering

Poor market returns are hurting funds of hedge funds even though they are meant to protect investors...

Poor market returns are hurting funds of hedge funds even though they are meant to protect investors' assets from market conditions. Analysis from Standard & Poor's shows the funds suffered in the first half of 2005, despite their ostensible attraction being their low market correlations. Randal Goldsmith, funds of hedge funds sector specialist at S&P, said: "Some funds of hedge funds are managed for, and generally achieve, independence of market direction. But general market factors such as historically low interest rates, tight credit spreads, lack of volatility and trendless markets h...