HEDGE fund managers at leading funds, including Peloton Partners, Moore Capital and Vega, face the prospect of losing lucrative bonuses unless they dramatically raise their returns in the fourth quarter.

Fund returns released to investors yesterday show that Peloton Partners’ $2 billion (£1.4 billion) multistrategy fund lost 1.64 per cent in September. It is down 0.18 per cent for the year.

The firm was set up by Ron Beller, the former salesman at Goldman Sachs who failed to notice that his bank accounts had been plundered by his wife’s secretary.

Peloton has been hit recently by the departures of several senior staff, including Maxwell Trautman. It is one of only four firms in Europe to have raised $1 billion from investors when it debuted a year ago.

Hedge fund managers will feel pressured to boost their performance as failure to garner any returns above a certain level means that they will be unable to collect their customary 20 to 30 per cent slice of profits, typically described as “performance fees”.

The industry views performance fees as their bonus for good trading. Salaries for their staff, trading terminals and pricy offices are already covered by their 2 per cent slice of investors’ cash for expenses.

September has proved to be a difficult month for some funds, which were caught out last week by a surprise drop in the Philadelphia Federal Reserve index, which could dash hopes that the US economy will have a soft landing. Traders say they are uncertain over the direction of American interest rates.

The $899 million Keynes Leveraged Fund, which is run by Sushil Wadwhani, a former member of the Bank of England monetary policy committee, has risen just 1.1 per cent this year. Moore Capital’s flagship $3.2 billion Global Investment fund has gained just 0.97 per cent for the year. However, an investor, who declined to be named, said that it was a temporary blip in Moore’s performance. He pointed to its average annual returns of 22.09 per cent since it began trading in December 1989.

The greatest pressure from investors will be heaped upon Vega, the Madrid-based hedge fund, which could face demands for redemptions after all its funds dropped in September.

The Vega Select fund lost 8.24 per cent in September after erasing 9.76 per cent in August. It has dropped 14.45 per cent for the year.

Its $348 million Vega Diversified fund fell 6.54 per cent in September, posting a year-to-date decline of 13.3 per cent. Its flagship Vega Global fund slipped 0.92 per cent in September.

A fund of funds manager said that Vega had been wrongfooted by bets that bond prices would decline and that the Japanese yen would rise against the euro.

Vega, set up by the star trader Ravinder Mehra with backing from Banco Santander Central Hispano, has stumbled in recent years. After gathering $13 billion in assets to become Europe’s largest hedge fund, it was halved in 2005 as investors withdrew their money after heavy losses.

Nonetheless, many large funds have posted double-digit returns this year. These include Michael Hintze’s $3.3 billion CQS arbitrage fund, which has gained 11.07 per cent. The $1.9 billion Drake Global Opportunites fixed-income fund, run by two former managers at Blackrock, has soared 35.01 per cent this year.

In comparison, the Dow Jones Euro Stoxx 600 has gained 6.8 per cent this year.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax