Found an interesting link to the Reuters UK website on hedge funds. Some headlines:
Commerzbank doubles hedge fund of fund assets
LONDON (Reuters) - Commerzbank Securities' Alternative Investment Strategies unit has doubled its hedge fund of fund assets over six months and sees regulatory change and strong investor demand continuing to support rapid growth.Fund of hedge fund investors face big risks
LONDON (Reuters) - Investors in some funds of hedge funds risk losing a big chunk of their investments because many providers fail to structure portfolios to account for a variety of risks, according to research published on Friday.
Hedge funds up 1.4 percent in October
LONDON (Reuters) - Hedge funds have posted a positive return for the 12th month in a row in October but lagged stocks as the global economic recovery gathered pace, according to new data.
The CSFB Tremont Hedge Fund Index, which charts the returns from a blend of 3,000 hedge funds using 10 different strategies, rose 1.4 percent in October after a gain of 1.5 percent in September.
Hedge funds, complex investment strategies which aim to provide positive returns whatever the direction of mainstream asset classes, have not been able to keep pace with the rebound in stock markets since March this year.
The index, published on Tuesday, is up 12 percent this year against a rise of more than 21 percent in the S&P 500.
With the S&P up 5.6 percent in October, long-short equity funds were the best performing hedge fund strategy, up nearly 2.5 percent.
"With a strong stock market at their backs, equity oriented strategies posted generally solid gains in October," said Oliver Schupp, President of Credit Suisse First Boston Tremont Index.
Dedicated short-selling funds -- which borrow stocks and sell them hoping they will fall and they can buy them back at a cheaper price -- performed worst, falling more than 7.5 percent over the month. They are also the worst over the year, down 28.4 percent.
Of course it is the last headline that is the most interesting, since this means that the average hedge fund cannot beat the S&P 500 while short-selling fund managers just don't seem to know when to quit. It sure makes you wonder why investors are flocking to vehicles with loads of risk, but not the commensurate rewards.
It's an up-Schwing! Just keep moving the stop loss up until it's hit!
The real question is what value does the average hedge fund manager add to the fund, if "active management" typically means underperformance when the market is going up? I mean, how hard is it for a hedge fund manager -- supplied with anything they want or need to do the job -- to learn to avoid buying into a downtrend or shorting into an uptrend, particularly in the big picture, when we have dead simple tools such as swing charts? Or a 25 cent plastic ruler? Or eyeballs?
Or am I just too demanding?
03.12.11 06:04 #