Tags: Hedge | funds | returns | sag

Hedge Funds Pull in Money, but Returns Sag

Tuesday, 02 Oct 2012 09:19 AM

By Dan Weil

Hedge funds are doing a lot better attracting money than they are making it for their investors.

While the Standard & Poor’s 500 Index has gained 14 percent so far this year — before dividends — hedge funds have returned only 3 percent, according to research firm eVestment, CNBC reports.

At the same time, hedge funds had an inflow of more than $20 billion from investors in the first half of the year.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

Given the fact that hedge funds charge investors a lot more than standard mutual funds do — often 2 percent of assets and 20 percent of profits — some are starting to question the wisdom of this asset class.

"Could the underperformance be cyclical or is there a structural change that has changed the return structure for the hedge fund industry?" Mary Ann Bartels, an analyst at Bank of America Merrill Lynch, writes in a report.

"We continue to conclude as in prior research, that there are likely too many hedge funds chasing too few returns."

Some experts say the problem is that hedge fund managers, with many institutional investors in their funds, are shying away from risk.

Going forward, "the industry will split between managers who are playing to win and those who are playing not to lose,” Kevin Gundle, co-founder of Aurum Funds, tells The Wall Street Journal.

“It's a very different mindset. New hedge funds will be born out of smaller, capacity-constrained managers with key risk takers."

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

© 2015 Moneynews. All rights reserved.

Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

CEI's Carrie Sheffield: Govt Suit Against S&P a 'Chilling Precedent'

Friday, 30 Jan 2015 21:27 PM

The government's case against Standard & Poor's over its rating of home mortgage bonds prior to the 2008 financial crisi . . .

HIF's Tom Hutchinson: Recession to Put Us in 'Deeper Hole'

Friday, 30 Jan 2015 20:44 PM

The U.S. economy is in great shape now, but the next recession won't be pretty, Tom Hutchinson, the senior editor of the . . .

Kudlow: After Romney, a GOP Message of Incentives and Growth

Friday, 30 Jan 2015 20:20 PM

If there’s anything the GOP needs , besides a winner , it’s a confident, incentive-based, pro-growth message. The party  . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved