Even though the collapse of several hedge funds as a result of the subprime mortgage crisis drew headlines last year, asset management firms Man Investments and Permal said that they did not receive an increase of redemption requests from nervous investors who wished to withdraw. The two companies have launched Securities and Futures Commission-registered hedge funds in Hong Kong for retail distribution. The number of retail hedge funds in Hong Kong is about 14 since the SFC finalised the authorisation in 2002. More than half of these are fund of hedge funds. While most long-only equity funds suffered this month, global macro hedge funds performed relatively better. The Credit Suisse/Tremont Global Macro Index returned about 10 per cent year-to-date as of March 10. The long-only equity funds benchmark MSCI World Index dropped 13.45 per cent since the beginning of this year. Global macro hedge funds can take positions in any markets or instruments: currencies, stock indices, bonds, energy contracts and commodities. These managers can use a discretionary approach, which means it depends on the managers' subjective opinions of market conditions. But some global macro funds are systematic, which means they take a quantitative, or rule-based approach. Depending on the strategies, some global macro funds benefited from the ups and downs of markets in the past few months. Some global macro hedge funds gained more than 50 per cent, but some performed badly and lost 30 to 40 per cent. 'If you look at the global spectrum there are hedge fund managers who are placing a few bets in one market, while some are placing many bets in different markets,' said Tim Wong, head of the AHL funds at Man Investments, adding that the best-performing global macro might have done well in one or two bets but some did badly in their bets. Kelvin Yip, assistant research manager at Fundsupermart.com, said: 'Many of the hedge fund indices are in the red year-to-date except the global macro strategy and merger arbitrage based on HFRX Indices, with the latter returns being marginally positive.' Man Investments' AHL diversified managed futures programme aims to diversify trades in different markets. This means the fund will not just trade in one or two markets. Mr Wong said the managed futures programme was similar to a global macro fund except it was more systematically driven. The fund had a return of 5.1 per cent in January this year and 2.4 per cent in February. By contrast, on average, world stocks went down by 1.9 per cent last month and world bonds only went up by 0.6 per cent. Mr Wong said the managed futures programme only traded in liquid markets such as currencies, stocks, bonds and interest rates with a low level of leverage. 'There are going to be times when you are making high returns,' Mr Wong said. 'But when the trends in the market are not so clear, you are trying not to lose too much money. We don't trade in any market that's illiquid.' Brenda Tse, director and head of Greater China at fund of hedge funds manager Permal, said she was not surprised that global macro funds had performed well in the past few months. 'We increased long-short, macro and commodity relative value strategies at the expense of more directional, long-based strategies to take advantage of the increased market volatility to capture alpha,' said Ms Tse. Alpha is excess returns over the benchmarks. Permal's natural resources fund of hedge funds increased its allocation to macro strategy funds from 16 per cent last year to 18 per cent this year to date. And it also increased its allocation to long-short strategy funds from 29 per cent last year to 30 per cent this year to date. The fund had a return of 3 per cent last month year-to-date. Ms Tse said that despite the months of subprime which prompted liquidity problems with some hedge fund managers, Permal had continued to provide net asset values of funds every two weeks. She also said that Permal was careful not to pick managers that were too highly leveraged, held illiquid assets and did not truly hedge their portfolios.