Posts filed under “Hedge Funds”
This has turned out to be a year of milestones for the hedge-fund industry. It is a tale we have chronicled all year. As markets barrel into the end of the fourth quarter, it’s worth reviewing the highlights from this year to see if we can deduce what might be in store for the 2&20 crowd in 2015.
The good news — at least for the fund managers — is that hedge funds continue to attract assets. The latest read is $2.82 trillion under management spread among almost 10,000 funds, according to HFR Hedge Fund Industry Reports.
The bad news? “Hedge funds are shutting at a rate not seen since the financial crisis,” according to a report earlier this month from Bloomberg News. The prime culprit is underperformance. Data compiled by Bloomberg show that as of Dec. 1, across all hedge funds, returns have been a mere 2 percent. It is the worst performance for the industry since 2011.
Part of the problem is in the skewed distribution of returns. Rather than the normal Gaussian distribution typically observed in smooth bell curves, it is feast or famine. A handful of top–performers are capturing the lion’s share of alpha, or market-beating returns, leaving the rest of the industry with scraps.
Category: Hedge Funds
Thanksgiving is behind us, and we are in full Shopmas mode. By now, you should have already made up your list of who has been naughty — overcharging for subpar performance — and who has been nice (those rare alpha-generators). Reward them accordingly. Let your favorite 2&20-er know exactly how much you appreciate their work with…Read More
You all the know urban legend of the conversation between F. Scott Fitzgerald and Ernest Hemingway. Fitzgerald: “Let me tell you about the very rich. They are different from you and me.” Hemingway: “Yes, they have more money.” It never happened, but it points to an interesting question: Why are we in America so fascinated with…Read More
Today is an auspicious anniversary, though it’s one I suspect many people may not recall. On Sept. 23, 1998, former Federal Reserve Chairman Alan Greenspan and William McDonough, then president of the Federal Reserve Bank of New York, managed to orchestrate the rescue of the hedge fund Long Term Capital Management. It was a strange…Read More
The news last Monday was a shock — the Calpers California earthquake. For a variety of reasons, the California Public Employee’s Retirement System, the nation’s largest public-pension fund, said it was dropping hedge funds from its roster of investment allocations. This tremor will be felt far and wide. We are unlikely to know the full…Read More
This was the big news yesterday out of California: The California Public Employees’ Retirement System (Calpers) today announced that it will eliminate its hedge fund program, known internally as the Absolute Return Strategies (ARS) program, as part of an ongoing effort to reduce complexity and costs in its investment program. The staff recommendation, supported by…Read More