2009
Bull market for hedge funds?
Filed Under (Hedge Funds) by Admin on 28-03-2009
Time to buy? Over 3000 absolute return funds made money in the last 12 months but how many long only equity managers? Money management is about achieving client objectives and QUALITY hedge funds HAVE delivered what investors want. Every smart investor I know intends to INCREASE their allocation to absolute return. Bonds have done better than stocks for 40 years and hedge funds have outperformed since 1970. The manager SKILL premium exists but the equity RISK premium? Unlike stocks, it’s always time to invest in good hedge funds. So while my zero beta, all alpha portfolio was up in 2008, I’ll be keeping those yen in the SAFE HAVEN of hedge funds.
The prospects for the REAL hedge fund industry are outstanding. Good hedge funds beat equity benchmarks on a risk-adjusted basis over EVERY time horizon. So far in 2009 most hedge funds that I follow are positive while unhedged equity funds have lost another -10% after a disasterous -40% in 2008 and most are negative for the decade. Despite a drawdown last year, even the index of “all” hedge funds delivered +22% alpha compared to the stock market. The very rare hedge fund that blows up gets saturated media coverage but there have not been many articles on the hedge funds that MADE +20%, some over +100%, in 2008.