hedge fund returns

Z

zdreg

on the subject of money management
anybody care to explain the below.

Quote from makloda:

Your criticism is missing the point. No hedge fund investor is interested in outperforming your simple buy and hold strategy. Outperformance is (almost) entirely irrelevant. Hedge Funds are measured by their ability to deliver risk adjusted returns.

The typical HF investor is looking for a) positive monthly/quarterly/annual returns regardless of the performance of the strategies' underlying markets (e.g. equities, commodities, currencies etc.) b) low volatility of returns.


are you saying that the risk adjusted returns of hedge funds are less than buy and hold strategy after all expenses?


the original question was what percentage of hedge funds do better than a buy hold strategy after all expenses including taxes.

why invest in a hedge fund for the long
term if they can not exceed after all expenses including taxes a buy and hold strategy.
 
two types of returns -- absolute and relative.

[1]you can underperform the market and still make money. this is positive absolute return.
[2]you can outperform the market and still lose money. this is positive relative return.

examples:

[1]you make $10,000 but the s&p500 would have made $500,000. you made money but did not beat the market.
[2]you lost $10,000 but the s&p500 would have lost $500,000. you lost money but still beat the market.




Quote from zdreg:

on the subject of money management
anybody care to explain the below.

Quote from makloda:

Your criticism is missing the point. No hedge fund investor is interested in outperforming your simple buy and hold strategy. Outperformance is (almost) entirely irrelevant. Hedge Funds are measured by their ability to deliver risk adjusted returns.

The typical HF investor is looking for a) positive monthly/quarterly/annual returns regardless of the performance of the strategies' underlying markets (e.g. equities, commodities, currencies etc.) b) low volatility of returns.


are you saying that the risk adjusted returns of hedge funds are less than buy and hold strategy after all expenses?


the original question was what percentage of hedge funds do better than a buy hold strategy after all expenses including taxes.

why invest in a hedge fund for the long
term if they can not exceed after all expenses including taxes a buy and hold strategy.
the underlying assumption is that markets will have an annualized return of 8% per annum over five to ten years.
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Quote from zdreg:


why invest in a hedge fund for the long
term if they can not exceed after all expenses including taxes a buy and hold strategy.
More...

because the risk is much lower???

the return from holding a t-bill is lower than that of holding stocks.

do you think everyone should put all their money in stocks when investing for the long run, even if they get very disturbed by short term losses?
 
i understand the concept of performance on a risk adjusted basis. i basically wanted
comments on the buy and hold strategy which to me is the gold standard of investment strategies. you don't share with a general partner and if handled properly not shared with the government either. these are big hurdles for hedge funds to overcome.
 
Quote from BJL:

because the risk is much lower???

the return from holding a t-bill is lower than that of holding stocks.

do you think everyone should put all their money in stocks when investing for the long run, even if they get very disturbed by short term losses?
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i've heard of investments which claim a return of two or 3 percents pts above the t bill rate with slightly more risk than a t bill rate.
if they get disturbed by short term losses they should be in t bills or some money market fund.

after exps including taxes these so call volatility reducing instruments turn out to be a figment of imagination . in any case i am talking about a buy and hold strategy vs. an active stock managed porfolio.

as explained previously the hurdle of expenses including taxes will preclude outperformance on both an absolute basis and on a relative basis. on a relative basis don bright and paired trading to the contrary the strategy does not exist.
 
Quote from zdreg:

i've heard of investments which claim a return of two or 3 percents pts above the t bill rate with slightly more risk than a t bill rate.
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right, that's exactly the sort of investment that'll blow up eventually.

check out the 3yr history of the Bear Credit funds before their implosion. relative high returns and no volatility. steady line up right untill they plunged into the abyss.

risk and return will always be related.

you may get some better deals if you avoid the crowded places, you may get a better portfolio performance if you use a broad diversified approach. hedge funds are great vehicles to use for both these approaches. but be sure to understand what kind of risk they take to get their returns.
 
Quote from BJL:

right, that's exactly the sort of investment that'll blow up eventually.

check out the 3yr history of the Bear Credit funds before their implosion. relative high returns and no volatility. steady line up right untill they plunged into the abyss.

risk and return will always be related.

you may get some better deals if you avoid the crowded places, you may get a better portfolio performance if you use a broad diversified approach. hedge funds are great vehicles to use for both these approaches. but be sure to understand what kind of risk they take to get their returns.
More...

"right, that's exactly the sort of investment that'll blow up eventually.

there you go. this gentleman understands. for the additional two per cent which you think is safe you will blow up your portfolio.
 
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