Bleak house (or the outlook on hedge funds now)

Charles Dickens' Bleak House spins a tale of mystery, intrigue, family dynamics, and irony in the Victorian age that had readers gripped by its indictment of the English court system. While the novel is packed with intricate plot twists and turns, the main story line centers on the contested will case of Jarndyce and Jarndyce, which whenit finally ends, finds that the costs of litigation have entirely consumed the estate. The erosion comparison is unfortunately apt when compared to the current state of the hedge fund industry.

Investors lose appetite for the hedge fund "northing burger"

Market choppiness, layered fees, allocation realignments, and burgeoning regulations worked to chip away at the historical performance trends of hedge funds in 2016. Investors expressed their dissatisfaction with hedge fund performance to industry bellwether survey group Preqinin their September Investor Outlook: Alternative Assets H2 2016. Some of the findingsreveal that:

• Four out of every five of the investors interviewed in June 2016 expressed disappointment with hedge funds for failing to meet their return expectations over the past 12 months.
• Significant numbers of investors, approximately 39% of those Preqin surveyed, plan to reduce the amount of capital they have invested in hedge funds over the next 12 months.
• Less than half this figure (18%) plan to increase their exposure.

Hedge fund managers are feeling the impact of this gloomy outlook, andas 2016 winds down, remain concerned with what implications these views might mean for fund allocations next year.

However, there were some glimmers of hope also captured in this survey data. As global market struggles continue to foster uncertainty among investors, a good......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.