Hedge Fund Returns Half
Byron Wien Predicts Hedge Fund Returns to Fall by Half
The VP of Blackstone Group LP's advisory services division, Byron Wien, has issued a grim prediction for the booming hedge fund industry. Mr. Wien told the audience at a recent hedge fund conference that he expects hedge fund returns to halve. He says that hedge funds will try to protect their investors' capital by reducing risk which could bring returns down from 20% to 10%.
Returns may drop to 10 percent from 20 percent as funds lose their “zeal,” Wien, 77, told the GAIM International hedge fund conference at Monaco’s Grimaldi Forum today.
“I’m worried that by trying to protect capital on the downside they give up too much on the upside,” he said. “The concept of hedge funds was to produce equity-like returns with bond-like volatility. The danger is we get bond-like returns with equity-like volatility.”
Hedge funds lost an average of 2.6 percent in May, the worst month since November 2008, according to the HFRX Global Hedge Fund Index. The S&P 500 retreated 8.2 percent, the biggest monthly drop since February 2007.
Wien called for a stock market rally in the U.S. last week, saying that Europe’s debt crisis caused too much pessimism in the U.S., where profits for companies in the Standard & Poor’s 500 index are projected to rise 17 percent this year. Source
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