DSP Japan Fund - Optimism or Delusion?
With a trace of schadenfraude, let’s look at a recent hedge fund failure: DSP shuts Japan hedge fund due to ’significant’ underperformance
Assets had fallen to around £20 million from a high of above £500 million in 2006, and the fund had lost 39.05% over the year to date versus a benchmark loss of just 4.7%, and following several years of double-digit losses.
Hmm. Don’t you think that at some point after several years of double-digit losses, one would come to the realization that 200%+ gains would be needed in the future just to bring back the AUM to break-even? Following which, one would write the ‘Dear Investor‘ letter and shut down the fund? A la Ospraie:
Ospraie Management LP is shutting its flagship commodity hedge fund after it lost almost 40% this year, according to a letter the firm sent to investors Tuesday. Because losses suffered by Ospraie Fund have exceeded 30%, investors don’t have to abide by its “lockup.”
You have got to be very optimistic (and a strong believer in miracles) to believe that a 60%+ draw-down can be recovered that easily.
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