By Lawrence Delevingne and Svea Herbst-Bayliss
NEW YORK/BOSTON June 25 (Reuters) - UK voters' surprise decision to leave the European Union roiled markets on Friday, but hedge funds appear to have avoided crippling losses, according to market data and people familiar with fund performance.
Money managers were positioned relatively defensively coming into the vote, meaning they had reduced the amount of capital exposed to market turbulence, and even used the resulting sell-off as a buying opportunity, according to a report from Credit Suisse's prime brokerage division late on Friday.
"I don't want to say it's a non-event, but we're not seeing panic," said Eric Siegel, head of hedge fund investments at Citi Private Bank. "It's just a bad day in the market."
Hedge funds that bet on or against European stocks were hit hardest on Friday, with most losing between 2 and 4 percent, two investors familiar with the numbers said.
For some the pain was even worse. The London-based Adelphi Capital's $1.9 billion European fund was off 8 percent at one point on Friday, a person familiar with the fund's performance said. The fund was already down 9.5 percent for the year through late last week.
How the approximately 8,400-fund industry fared during the Brexit turmoil will not be clear until early July when clients get their monthly performance reports.
While funds were relatively well prepared for gains in U.S. Treasuries and a fall in the pound, they remained exposed to the steep declines that hit equity markets, according to weekly data sent by traders to the U.S. Commodity Futures Trading Commission.
GAINING GROUND
Yet many funds appeared to have fared relatively well.
Money managers that use macroeconomic theories and computer-guided "systematic" predictions to invest generally saw their funds remain steady or turn a small profit following news of the "Leave" vote, according to interviews with hedge funds and their clients.
Managers using such strategies can quickly adjust portfolios and react to data, unlike so-called fundamental managers who are often forced to stick with individual stocks and bonds.
For example, the main fund managed by Sweden-based $6.5 billion Lynx Asset Management gained 5 percent as of Friday afternoon on the British vote, according to a person with knowledge of the matter. The fund's computers recently positioned it in a short against the British pound, a lucrative bet given the currency's record plunge following the vote.
Alcova Asset Management, a small London-based quantitative firm, benefited from its short stock bets, and its main fund gained about 1.5 percent following the referendum result, according to a person familiar with the situation.