According to a report by Dow Jones’ Neil Shah, hedge funds are continuing to get hammered on currency trading as a tumultuous 2011 winds down, according to a widely followed performance index.
Currency-focused hedge funds dropped 1.33% in October, according to Parker Global Strategies, which invests in such funds, bringing losses over the last 12 months to over 3%. The funds lagged the nearly 6% gain in the Standard & Poor’s 500-stock index over the same period.
Traders were tripped up by the dollar’s sharp fall against the euro and other currencies in October. Many funds had previously invested heavily in the U.S. currency as Europe’s debt troubles escalated and the global economic outlook worsened. They were caught as investors swung back toward riskier investments.