Thursday, September 12, 2013

Hedge Fund Managers – the Smartest Folks in the Room – Turn Out to Be Pretty Dumb


Large and wealthy investors like pension funds and Mitt Romney get to invest with hedge funds, something not available to the average investor.  The response from the average investor, ‘thanks’.  See the management of a typical hedge fund rakes in millions, but that is not pay for performance.

Hedge Funds Severely Underperforming This Year
It’s been a great year for the stock market. It’s been a tough year for a hedge-fund manager.
A typical hedge fund has risen 4%, on average, this year through Aug. 9, according to an analysis conducted by Goldman Sachs That performance compares to a 20% total return (including dividends) for the S&P 500 over the same time frame, meaning the market has outperformed an average hedge fund by five times this year.
Hedge funds, on average, underperformed the markets last year as well, with an 8% gain, compared to a 16% total return for the S&P 500.

In fact, in a rather strong market a bunch of these funds lost money.

 Fewer than 5% of the hedge funds that Goldman monitored have outperformed the S&P 500 this year, while about 25% of these funds have posted absolute losses.

Of course, these are the same people that turned on Mr. Obama in 2012 after his economic policies and bank subsidies and failure to prosecute their abuses saved their collective butts.  Yeah, they are just as clueless politically as they are in the area of finance.

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