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Alternative Market Briefing

Hedge funds’ disappointing decade for some

Thursday, December 27, 2012

Benedicte Gravrand, Opalesque Geneva: - The Economist is wondering why the Nobel Foundation plans to increase its investment in hedge funds. After all, the paper says in its year-end issue, hedge funds' returns were mediocre in 2012.

Furthermore, "the S&P 500 has now outperformed its hedge-fund rival for ten straight years, with the exception of 2008 when both fell sharply," the article notes. "A simple-minded investment portfolio—60% of it in shares and the rest in sovereign bonds—has delivered returns of more than 90% over the past decade, compared with a meagre 17% after fees for hedge funds. As a group, the supposed sorcerers of the financial world have returned less than inflation. Gallingly, the profits passed on to their investors are almost certainly lower than the fees creamed off by the managers themselves."

According to a report this month from data provider Hedge Fund Research (HFR), after narrowing throughout 2011, performance dispersion between the top and bottom deciles of hedge funds increased in the trailing 12-month period ending 3Q12, wi......................

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