Hedge Funds Failing or Thriving?
Thriving, yet the answer you will get varies widely based on who you ask.
One of the best performers of 2007 has been Paulson Capital who raised a $1B fund to bet early on the subprime meltdown. He made out with a handsome 587.5% return for 2007 as of 10.30.07. “There’s never been a trade of this size of profit in the history of financial markets,” says Arki Busson, chairman of EIM Group, which has $13bn invested in hedge funds.
While 2007 was a rough year for some equity managers while others excelled in showing their stock-picking opportunities despite the overall volatility. Even with all of the market-based turmoil hedge funds produced strong returns through 2007. Credit Suisse/Tremond hedge fund data shows that hedge funds are out pacing the S&P 500 and MSCI World Index by several hundred basis points. Many hedge funds are in hiring mode with growth outstripping the number of professionals they have on board to manage it.
This outperformance by hedge funds is contrary to what you might have guessed if you frequent the NY Times or WSJ on a regular basis, both have been focusing on hedge fund meltdowns, quantitative models failing to perform, and a few frauds within the industry. It might sell more newspapers but it is also misleading, it is always safer to check the true pulse of the industry by speaking to professionals working within it, looking at data produced directly from groups like the Hedge Fund Research Group and reading articles written on niche sites such as the Albourne Village, Financial Times, Fierce Finance, All About Alpha or HedgeFundBlogger.com.
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Story Source: FT
Picture Source: FT