Metacapital Management named top-performing hedge fund


Metacapital Management founder Deepak Narula might be the latest upstart in the hedge fund industry.

Bloomberg Markets has pronounced him the top performing large hedge fund manager for 2012.

"Narula, 49, has used Fannie and Freddie to build the world's most-successful hedge fund. His Metacapital Mortgage Opportunities Fund, which invests heavily in agency mortgages, returned 37.8 percent in the first 10 months of 2012, putting it at the top of the Bloomberg Markets list of the 100 best- performing hedge funds managing $1 billion or more…That comes on top of a 23.6 percent return in 2011. The Mortgage Opportunities fund is up 520 percent since it started trading in July 2008."

Narula and others correctly bet that agency-backed mortgages were primed for a rebound. He was not alone on that, as three of the top five funds on the biggest winners list also were heavily invested in agency-backed mortgages. Nevertheless, congratulations are definitely in order.

These sorts of accolades are cause for nervousness as well as celebration, however. The pressure is now on to continue to deliver outsized results, or at least avoid massive declines. John Paulson, among others, knows all too well that staying on top can be difficult and costly.

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