Quadriga Superfund - Managed Futures

[Cutten]

Quote from Maverick74:

Kernan,

Look buddy, do me a favor. Take the info they sent you and throw it in the trash. I am doing you a huge favor here. Trust me on this. You do not have the risk tolerance for this fund, or probably any hedge fund for that matter.

People should be aware that the volatility of the investment in a fund can be chosen by the investor, as long as the fund manager can give an accurate estimate of typical and worst-case drawdown sizes.

For example, if a fund has regular 20% drawdowns, and a worst case 40% drawdown, then you can fine tune this to 2% and 4% respectively, simply by investing 1/10th as much.

If 20% is "painful", simply decide what is not painful (e.g. 5%), and then invest proportionally i.e. 5/20 = 1/4 the original amount. Problem solved.

 

[Alexandre]

is if people will start redeeming from the fund because performance is bad....

 

[Corso482]

Why does the website stop reporting performance after Feb 04?

 

[Ninja]

Quote from Cutten:

People should be aware that the volatility of the investment in a fund can be chosen by the investor, as long as the fund manager can give an accurate estimate of typical and worst-case drawdown sizes.

For example, if a fund has regular 20% drawdowns, and a worst case 40% drawdown, then you can fine tune this to 2% and 4% respectively, simply by investing 1/10th as much.

If 20% is "painful", simply decide what is not painful (e.g. 5%), and then invest proportionally i.e. 5/20 = 1/4 the original amount. Problem solved.

:eek:

Did you heard the story about this stupid investor who invested 5 times the original amount? Now this dumb-a$$ is complaining about the 100% drawdown...

 

[Alexandre]

Quote from Ninja:

Do you heard the story about this stupid investor who invested 5 times the original amount? Now this dumb-a$$ is complaining about the 100% drawdown... :eek:

this fund is already highly geared, you must be crazy to lever it even more

 

[NickPapaGeorgio]

Quote from Alexandre:

is if people will start redeeming from the fund because performance is bad....

Why would this matter? It's not a stock. When people sell bids don't drop. If people get out it won't affect the performance of the fund. Just as when people buy in, the fund doesn't go up because of that either.

 

[Alexandre]

Quote from NickPapaGeorgio:

Why would this matter? It's not a stock. When people sell bids don't drop. If people get out it won't affect the performance of the fund. Just as when people buy in, the fund doesn't go up because of that either.

wrong, if people start selling massively, then the fund needs to unwind the positions it has taken with the capital of its investors. If these positions are levered and inflows are important, you also end up shooting yoursfelf in the foot, i.e. liquidating against your own positions.

 

[steve46]

Hello:
FYI, on page 22 of the new issue (June 2004) of Futures Magazine, I see that Quadriga Superfund A shares lost over 13% in April, and series B lost over 19%. Year to date, they both went from a respectable profit to a loss of about 3 or 4 percent. Based on my experience, that kind of volatility signals problems in the underlying program structure. Just one man's opinion. Good luck, Steve46

 

[NickPapaGeorgio]

Quote from Alexandre:

wrong, if people start selling massively, then the fund needs to unwind the positions it has taken with the capital of its investors. If these positions are levered and inflows are important, you also end up shooting yourself in the foot, i.e. liquidating against your own positions.

Alexandre, I don't know where you went to business school but this is simply not true. As I use to have a fund and know this firsthand. Most hedge funds want 30 days notice when you are going to take money out. When they know the amount that is going to be taken out, they simply reduce the size of their position. They are not liquidating anything. It would be as if you were long 100 spoos in your fund and now you have to sell 5 of them to adjust the fund for the redemption. It doesn't change your net position. You are still in all your positions, just with different size now. Same is true when people add funds. This is exactly how index trackers work. Fund managers have to buy and sell a proportionate amount of stock to adjust their funds to the indexes. It doesn't have any effect on the index itself.

So when people add money to Quadriga, they don't leave that money in cash, they automatically add it to all their existing positions. This effect is what led to the huge bull market in the 90's with mutual funds. As more and more money made its way into mutual funds every month, fund managers were forced to continue to keep adding to their positions. This does affect the instruments they trade. But as far as Quadriga goes, you can't manipulate the value of the fund by buying or selling it otherwise it would be a vehicle that someone from the outside could arbitrage and manipulate for their own profit. It simply does not happen.

 

[NickPapaGeorgio]

Quote from steve46:

Hello:
FYI, on page 22 of the new issue (June 2004) of Futures Magazine, I see that Quadriga Superfund A shares lost over 13% in April, and series B lost over 19%. Year to date, they both went from a respectable profit to a loss of about 3 or 4 percent. Based on my experience, that kind of volatility signals problems in the underlying program structure. Just one man's opinion. Good luck, Steve46

Steve, I invest in many hedge funds and they all exhibit the same volatility. Volatility is what allows funds to make money. Volatility works both for you and against you.

BTW Steve, Schindler's fund was down 25% in June and down 20% YTD. Of course his fund was up 100% two years ago and was down 40% to start last year before finishing positive for the year. You never know man. This could be Aaron's best year ever or not. You really can't extrapolate any info from the month to month performance. If you could, then you could trade these funds as instruments but it would never work. Trust me, people have tried.