Some Hedge Funds really taking it

Here's the track record of a Swiss Fund of hedge funds. In USD, net of fees. This is a real live forward trading track record, no backtesting. Results are net of fees. Handily outperformed global equities and Swiss government bonds over a full market cycle. Down 4.5% YTD in 2008.

But all right, I hear you... hegde funds are 'inferior investment vehicles' just because you say so. Just stick your money in SPY EFA TLT and keep wondering why Yale & Harvard Endowments, Family Offices, big Institutions etc. allocate 20+% of their capital to hedge funds.

Only amateurs worry first about fees and only second about risk adjusted returns.

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Quote from nutmeg:

I propose an F3. Fund of fund of funds.
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they exist.


it's the portfolio construction of a fof or f3 in which lays potential advantage over doing it yourself. in addition, fof's are often invested into closed funds that you simply can not gain access to any other way. it's not near as simple as it appears here.

surf



here's some other reasons and a clear explanation for those who have no clue:

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Quote from FerdinandAlx:
Most hedgefund investor would do better if they just bought dividend paying bluechips and use the yield to buy OTM puts.
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Most investors in hedge funds will typically have a 20-50% exposure to equities to begin with. Being long an additional synthetic call on 'bluechips' instead of a diversified basket of hedge funds would be counterproductive to the overall portfolio's risk/reward characteristics.
 
Quote from makloda:

Most investors in hedge funds will typically have a 20-50% exposure to equities to begin with. Being long an additional synthetic call on 'bluechips' instead of a diversified basket of hedge funds would be counterproductive to the overall portfolio's risk/reward characteristics.
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you have found a way to dress mediocre investment methodology in kings clothes.

' Quote from Pekelo:
Hedge funds declined by an average 0.7 percent in June, bringing the year-to-date loss to 0.75 percent, data compiled by Hedge Fund Research Inc. show.

makelo- Outperforming the MSCI World USD Index by how much, something like +18% YTD? LOL"



to judge hedge fund performance compared to some index for 1 year is statistically invalid.
a 2% managemnt fee + 20% is counter productive to long term profitability.
 
Quote from zdreg:
to judge hedge fund performance compared to some index for 1 year is statistically invalid.
a 2% managemnt fee + 20% is counter productive to long term profitability.
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1. The fund of funds I posted above has a 10 year track record, not 1 year.
2. I'll say it again for you: Only amateurs worry first about fees and only second about risk adjusted returns.
3. Did you say something about efficient markets in one of your posts above? Are you sure you're on the right forum, after all this is a trading forum. I am not sure about you, but don't we all live from market inefficiencies?
 
we all try to make a living from perceived market inefficiencies.
some succeed.most don't
again it is the cost of doing business (friction costs)that puts most investor in negative territory- taxes commissions, buying on offers and selling on bids, poor executions etc.
 
Quote from zdreg:

both makloda and covert refuse to recognize that hedge funds as a class are inferior investment vehicles because of fee structures and tax consequences. adding layers of fees is no different from buying on the offer and selling on the bid.the resultant friction costs and draw downs from excessive leverage will result in poor long term performance.
the idea that hedge funds as a class are exempt from efficient market theory is ludicrous.
extrapolating from a few counter examples is an error in logic 101.

name calling is the refuge of people who don't have the facts to support their hypotheses.
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Saying that hedge funds are an inferior investment is the same as saying, "owning a hamburger joint is a terrible investment" simply because the one by your house went belly up. I'll admit that there could be some factors that would make a mediocre manager outperform for a period, but there are good managers out there who will give you a better return than you would get on your own, and a collection of these managers (fohf) can smooth out returns over the long haul if the portfolio is constructed properly. I certainly hope you aren't going to tell me that, on your own, you could do a better job with your own assets in a diversified portfolio. You'd have to be an expert fixed income/currency/long-short/event driven/commodity specialist. It's simply not true.
 
Quote from SITH:

Saying that hedge funds are an inferior investment is the same as saying, "owning a hamburger joint is a terrible investment" simply because the one by your house went belly up. I'll admit that there could be some factors that would make a mediocre manager outperform for a period, but there are good managers out there who will give you a better return than you would get on your own, and a collection of these managers (fohf) can smooth out returns over the long haul if the portfolio is constructed properly. I certainly hope you aren't going to tell me that, on your own, you could do a better job with your own assets in a diversified portfolio. You'd have to be an expert fixed income/currency/long-short/event driven/commodity specialist. It's simply not true.
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everyone of your above investments will give mediocre returns due to friction costs including the previously mentioned taxes commissions, buying on offers and selling on bids, poor executions etc.
unless u are operating in an area where you have an advantage you will failbecause of friction costs. the small investor has an advantage over the big money because he can obtain and dispose of his position without disturbing the market.
all evidence points to the fact that mutual fund managers and hedge fundmanagers cannot out perform the market because of the friction costs and the law of large numbers which force money mangers to ignore certain investments

the answer is that i am not interested in a diversified portfolio. i am interested in trading
where i have an advantage. no more no less.
when the day comes that i cannot i will go into index funds whether it is the stock market as a whole or sector efts . I certainly will not give somebody 20% off the top. and that individual does not share in my losses.
show me a money manager who shares in my losses and and does not receive compensation unless returns exceed a certain indice.
it will never happen because they cannot do do it.
 
Quote from bh_prop:

Can be certain the long crude, short stocks (airlines et al) pair trade has done some damage the last few days
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this is the best post on the thread. it shows the reality of markets.
thanks
 
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