Equity hedge funds come up short in 2013
LONDON Aug 22 (Reuters) - Less than 5 percent of hedge funds betting on share prices have outperformed the S&P 500 this year after rallying stock markets hit managers holding short positions, a report by Goldman Sachs shows.
Hedge funds generated an average return of 4 per cent from the start of the year to Aug. 9, against a 20 percent rise in the U.S. benchmark index, with one in four having lost money over the period.
The Goldman Sachs report, which analysed the positions of 708 hedge funds with $1.5 trillion of gross assets, said that short positions - a bet on the price of shares falling - had weighed on managers.
The 50 stocks that attracted the highest amount of short-selling have risen by an average of 30 percent this year, leaving managers with losses, the report found.
A rebound in developed market economies and the more stable macroeconomic environment have encouraged investors to buy equities this year. The S&P 500 has hit record highs several times in recent months, aided by strong company earnings.
Hedge funds have fared better on the long side. Stocks among hedge funds' top 10 holdings - in the expectation of rising share prices - outperformed the S&P by nearly 12 percent this year.
Shares that most frequently appear among the largest hedge fund holdings include AIG, Google, Apple , General Motors and Citigroup.