Hedge Funds First Half 2012 Returns
Hedge Funds Underwhelm Investors So Far in 2012Hedge funds have had a tough go in the first half of 2012. Even top hedge funds have reported only meager gains compared to the S&P 500's gains so far this year. With Europe's debt problems and overall volatility in the market, hedge funds have struggled to impress investors and hope to finish the rest of the year with more substantial returns to hang their hats on.
Hedge funds have little to brag about halfway through 2012, with some of the biggest names reporting only small returns and trailing the benchmark U.S. stock index.
Paul Tudor Jones' flagship fund is up 1.59 percent through the third week in June, David Einhorn's biggest portfolio is up 3.7 percent in the first half, while Daniel Loeb told investors that his largest fund rose 3.9 percent during the first six months of 2012, investors in their funds said.
Compared with a year ago when many hedge funds were losing money, these returns might sound like something to cheer, especially since they beat the benchmark HFRX Global Index's 1.22 percent gain.
But they pale measured against the 8 percent rise in the Standard & Poor's 500 stock index during the first half, with the $2.1 trillion industry failing to wow at a time that public pension funds are increasingly turning to hedge funds to shore up ailing returns.
The industry's underperformance may again raise questions whether it makes sense for institutional investors to pay hefty fees to managers when they can get better returns by buying shares of low-cost index funds. Unlike most other portfolios, hedge funds take a management fee plus a performance fee that is often 20 percent or more. Source