Are Hedge Funds Still for Suckers?

[Banjo]

A number of the industry’s biggest names had a difficult, some might say brutal, time in August

http://www.bloomberg.com/news/articles/2015-09-10/are-hedge-funds-still-for-suckers-

 

[Maverick74]

These articles are very misleading. They are implying that these funds did poorly simply because stocks sold off. The fact of the matter is many of these funds are highly concentrated in emerging markets, in debt, currency and equity. They went there chasing yield because bond yields in the US are shit and dividend yields in the S&P are shit. This is what hedge funds get paid to do. Could some of them been better hedged? Perhaps. The problem is, hedging emerging market risk many times is simply adding additional risk. It's not as straightforward s hedging US exposure.

 

[curiousGeorge8]

Even the best hf took a big hit from time to time.

 

[Butterball]

The value (or curse) of owning hedge funds will show during the next bear market. Not during a tiny 5% airpocket.

 

[Frederick Foresight]

...They are implying that these funds did poorly simply because stocks sold off...

I think maybe you should reread the article.

 

[jonny1lot]

This image in the article was laugh out loud funny...http://assets.bwbx.io/images/ivXY_wbXfFQU/v1/-1x-1.jpg

 

[Maverick74]

I think maybe you should reread the article.

I did Gabfly.

 

[Frederick Foresight]

I did Gabfly.

Then it is unfortunate that you didn't understand it, John.

These articles are very misleading. They are implying that these funds did poorly simply because stocks sold off.

"...But while hedge funds overall have outperformed the broader market this year, it comes after years of lagging far behind. In 2012-14, when the S&P 500 rose 13 percent, 29.6 percent, and 13.5 percent, respectively, the HFRX index was up only a few percentage points each year, if that.

“August was a fair test, and many hedge funds had a tough time,” Simon Lack, author of The Hedge Fund Mirage, told the New York Times. They “failed to beat a 60/40 [stock and bond index] mix every single year since 2002, and they’re on track to repeat this year.”

The California Public Employees’ Retirement System last year announced it was pulling its entire $4 billion out of hedge fund investments, arguing that they’re hard to understand and too expensive to justify the returns they provide. Expectations at that time ran high that other big pension funds and endowments would follow. The opposite happened."

 

[Maverick74]

Then it is unfortunate that you didn't understand it, John.



"...But while hedge funds overall have outperformed the broader market this year, it comes after years of lagging far behind. In 2012-14, when the S&P 500 rose 13 percent, 29.6 percent, and 13.5 percent, respectively, the HFRX index was up only a few percentage points each year, if that.

“August was a fair test, and many hedge funds had a tough time,” Simon Lack, author of The Hedge Fund Mirage, told the New York Times. They “failed to beat a 60/40 [stock and bond index] mix every single year since 2002, and they’re on track to repeat this year.”

The California Public Employees’ Retirement System last year announced it was pulling its entire $4 billion out of hedge fund investments, arguing that they’re hard to understand and too expensive to justify the returns they provide. Expectations at that time ran high that other big pension funds and endowments would follow. The opposite happened."

Gabfly, the timing of the article happens right after a market correction. There is nothing new in that article. The above quotes have been going on for years, nothing is new there. They always roll out these articles when the market sells off and tries to make a correlation when there is none. There was nothing new to report here.

 

[Frederick Foresight]

...the timing of the article happens right after a market correction.

Is this the "timing" part you're referring to?

...They failed to beat a 60/40 [stock and bond index] mix every single year since 2002, and they’re on track to repeat this year.