The simultaneous departures of the managers of Goldman’s flagship hedge fund has many wondering if the fund’s performance was as dismal in 2008 as it was in 2007 and 2006. Volatile markets rocked the fund in those years, leading to negative returns and fund redemptions that shank assets from $12 billion to just $2.5 billion.
Last year, however, Global Alpha recovered a bit. Although performance was still disappointing compared to its best years, it handily beat the broader markets in 2008. While the S&P shrank 40%, Global Alpha had a gross return of 3%. That works out to about 1% after fees and expenses.
This is less than investors would have earned in a CD or, say, a frozen auction rate security. Nonetheless, in a year when returns at many hedge funds turned negative, it is not entirely dismal.
Goldman will report the performance of its hedge funds to investors on April 3.