Goldman Sachs’ $10bn (7.3 billion) flagship hedge fund dropped nearly 8 percent in a week at the end of last month as hedge funds recorded their worst returns in at least four years, Financial News reports.
The GS Global Alpha fund made a loss of 7.7 percent before fees in the week ended July 27, taking its performance for the year to -12.1 percent before fees, according to an investor.
That stretches its run of disappointing returns to more than 18 months, having reported a loss of 6 percent last year. It gained almost 40 percent in 2005 and its annualised return, before fees, is 15.1 percent since launch in 1995. It is understood the fund’s volatility has averaged 17 percent a year since launch. The bank declined to comment.
David Viniar, Goldman Sachs chief financial officer, said in June there had been no substantial redemptions from the fund. However, in the last two quarters the hedge fund’s poor performance has dented Goldman Sachs Asset Management’s profits because it failed to earn performance fees.
Goldman’s losses came as the hedge fund industry suffered its worst calendar week in four years, with the investable hedge fund index, published by data provider Hedge Fund Research since 2003, dropping 3.01%. Another fund, Man AHL, run by UK firm Man Group, fell 6.7 percent the same week.