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This article was authored by Bertrand Bricheux, Head of Marketing & Business Development at UBP Alternative Investments, Geneva, Switzerland:

There is no denying that the performance in 2008 of hedge funds and funds of hedge funds was disappointing. The entire industry has failed to fulfil its moral obligation of diversification, rather than shadowing other asset classes. And that’s that.

This final judgement turns out, however, to be a little too simplistic and singularly lacking in long-term vision; all the more so given that the concept of absolute return has never been a synonym for ‘risk-free’. Despite attacks from the Anti-Hedge Fund Brigade, and a press not best informed about financial mechanisms, one should take a step back from the financial crisis and keep a cool head.

I refer those hedge-fund detractors to an article by Carol Loomis published in Fortune magazine and entitled, ‘Hard Times Come to the Hedge Funds’. In this article, she sets out both the long- and short-side losses that hedge funds incurred during a year in which stock markets fell. She also consigns them to an early grave. Moreover, she calls on the SEC to re-establish some semblance of order to short-selling by use of the uptick rule.

It should now be added that this article appeared in January 1970 and that Loomis was commenting on the disappointments of the previous year. So, history is repeating itself thirty-eight years later with the same questions and the same controversie......................

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