The Death Of Hedge Funds?

[thenews]

With the very largest and most experienced of hedge fund managers vociferously commenting on the "Truman Show" mirage of the markets, the danger of currently policies (there is no way to tell exactly how it all will end. Badly, we guess), and the need for stock-picking prowess, we thought the following chart might highlight the dawning of the death of an entire substrata of so-called hedge-fund managers (and not just the $0 AUM newsletter publishers) who appear unable to "stockpick" their way out of a Fed-provided paper bag. Since Q4 2010, Long/Short funds are down 6% while the immutable low-cost levered wealth creation policy vehicle of choice for the Fed (the S&P 500) is up almost 50% (dividends aside).

There's "hedged" funds and then there's this...

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[John Seekers]

We examine US hedge funds’ performance persistence and mixed-trading strategies across both different economic and market conditions for 1990-2014. We use parametric and non-parametric models and we examine hedge fund persistence in various aspects. During “good” times there is smoothness in hedge fund (risk-adjusted) returns whereas during “bad” times this smoothness disappears. With respect to the market benchmark, with a few exceptions, there is no performance persistence. Concerning the persistence within each group of strategy, for “good” times we found persistence up to one year whereas for “bad” times we found up to six months. There is strong evidence that the persistence is driven mainly by the top performers, and recessions are harsher than down regimes for hedge fund persistence. Finally, we constructed mixed trading strategies and we introduce the zero investment portfolio “momentrarian” strategy that can bring conditional high excess returns to investors.