It Is Not Always Generating Alpha

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Vincent Au, portfolio manager at Gondor Capital Management, the New York-based hedge fund firm, said that being a portfolio manager is not always generating alpha or strong returns. The main priority of a good manager should always be ensuring that the funds do not lose money.

Au's two hedge funds have consistently beaten the odds and outperformed much larger peers with strong gains in the first four months of 2017.

Gondor Capital said that its domestic Gondor Partners LP gained 8.32% through April (0.36% month to date) while its offshore Gondor Funds LTD generated a strong 7.75% return during the same period (0.43% month to date).

The solid performances of Gondor's two funds completely outshine their much bigger counterparts as the average hedge funds returned less than half of what they generated in the first four months of this year. The HFRX Hedge Fund Index gained 3.43% through April.

In March, Gondor Partners and Gondor Funds returned 1.41% and 2.18%.

Au commented, "March 2017 was a month I decided to take risk off with the French elections looming as well as my belief valuations are stretched currently. Being the portfolio manager is not always generating alpha; it is also about ensuring the funds do not lose money. March was a month where we accepted a lower return in exchange for a higher probability of success."

Since its inception in May 2013, Gondor's onshore fund has generated a cumulative return 77.83% compared to HFRX Equity Hedge which returned 7.80% and the Standard & Poor's 500 posted 62.39% during the same period. The Gondor Funds LTD has a cumulative return of 48.18% since its launch in July 2013 while the HFRX Equity Hedge and the S&P 500 posting 8.97% and 60.83% in the same period.

Au added, "While I am very happy with the funds' performance and returns, I am personally most gratified by '80% plus' that is the percentage of the months the funds have been profitable regardless of market conditions."

Since their launch, Gondor Partners and Gondor Funds LTD sustained losses in only five months each, with the rest of the months reporting positive gains.

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This article first appeared on GuruFocus .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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