Hedge fund Graham Capital Management founder Kenneth Tropin is predicting tough times ahead for those looking to make money by tracking big stock indexes, according to a report by Reuters.
Tropin, who focuses on macro trading, which looks to take advantage of big market swings to trade bonds, currencies and commodities, believes that with the S&P 500 stock index down almost 18% so far this year, and on track for its first fall in four years and its biggest slide since 2008m, investors should be wary of more equity focused hedge funds and funds that are “correlated to beta”.
Data from Preqin shows that stock-picking hedge funds, have lost money this year, with their cumulative returns falling 12.24% in the 12 months ending 31 July. Tropin’s main, actively managed fund meanwhile is up almost 20% this year so far, compared to other actively managed macro strategies which are up on average over 4% over the same period, according to Preqin.
Another Graham fund, which combines human and computer-led trading ideas, returned almost 30% for the same period, while the firm’s computer-led macro fund is up by roughly 24%, for the year so far. The industry cumulative average, YTD is almost 3%.