A New Generation of Hedge Funds

Ralph Arndt, CIO of Australia’s Future Fund, an A$166 billion ($125.3 billion) sovereign wealth fund, sees hedge fund investment as a “necessary tool to help reduce risk while providing uncorrelated returns,” according to a recent article in Chief Investment Officer. Arndt has so much faith in his strategy, the article reports, that he has more than 15% of the portfolio in hedge funds, exposure which he says serves to reduce risk, “and in particular to… Read More

A Change in Hedge-Fund Fee Structure is Afoot

In a recent Bloomberg article, columnist Barry Ritholtz underscores his long-standing criticism of the traditional “2 and 20” hedge-fund industry fee structure as “expensive and unnecessary.” Expensive, Ritholtz writes, “because one can capture market-average returns, or beta, for a few basis points in fees in a low-cost mutual fund or exchange-traded fund; and unnecessary because investors are paying a 20 percent surcharge for beta rather than outperformance, or alpha.” Ritholtz points out the “puzzling” fact… Read More

Hedge Fund Stars Losing Shine, But the Industry is Fine

Despite the fact that hedge funds have “fallen on hard times”, writes columnist Nir Kaissar in a recent Bloomberg article, “don’t shed a tear for the industry just yet.” The article reports that, although the industry hasn’t kept pace with the broader market in recent years (citing Alan Fournier’s Pennant Capital Management and David Einhorn’s Greenlight Capital as examples), on the whole it has performed better than some of the “star” managers–the HFRI Fund Weighted… Read More

Short-Seller John Hempton Taunts Ackman

An article in The Sydney Morning Herald offers a profile on Australian hedge fund manager and “fraud-hunting short seller” John Hempton, a self-described eccentric who, while known mostly for his short bets, says he makes his real profits from long-term stock picking. The article reports that Hempton’s firm, Bronte Capital Management, “has bet profitably against Valeant Pharmaceuticals International Inc. and made money on a stake in Herbalife Ltd., both of which pit him against Ackman.”… Read More

Bill Ackman Seeing Rapid Investor Redemptions

After three years of poor performance, Bill Ackman of Pershing Square Capital Management LP is losing investors at a clip and, according to a recent article in The Wall Street Journal, “facing a future that would no longer include managing a private hedge fund.” The Blackstone Group LP has been withdrawing cash from the fund, and JPMorgan Chase & Co.’s asset-management group has stopped recommending the fund, the article reports. Pershing’s assets have fallen from $20… Read More

Study Shows Hedge Funds that Research More Earn More

A new study from Rice University found that hedge funds that conduct frequent research post better average returns compared to those who do not, according to a recent article in CNBC.com. Specifically, researchers found that hedge funds accessing one or more SEC filings in a month exhibited 1.5 percent higher returns in the subsequent month and that “above-median users generate 2 percent higher returns per year.” The firms Renaissance Technologies and BlackRock, the article reports,… Read More

Cliff Asness Hedges Regarding Hedge Funds

In a recent Bloomberg article, AQR’s Cliff Asness argues that the opinion pendulum on hedge funds has swung too far, that “all you read about today is that hedge funds are a failure and investors are fleeing.” This overreaction, he explains, comes in part from; (1) a failure to understand how to measure hedge-fund returns, and the fact that (2) the last few years have been a “mild disappointment and they have given critics enough… Read More

Ritholtz on Hedge Fund Mediocrity

According to Bloomberg columnist Barry Ritholtz, hedge funds are selling public pension funds “an inflated estimate of expected returns,” adding that “it is a challenge to explain why so much money has found its way to so much mediocre performance.” He cites findings reported by Bloomberg reflecting how “investment managers often share their lofty fees with placement agents who hawk the hedge funds….especially to pension funds. Some states have banned their pension plans from using… Read More

Top-Ranking Hedge Funds

A recent article in Institutional Investor lists the top-earning hedge funds. The list is headed by Ray Dalio’s Bridgewater Associates, the world’s largest firm with $122 billion under management as of the beginning of 2017. George Soros ranked second, followed by Ken Griffin’s Citadel.

Soroban Capital is Among Funds Returning Client Money

Soroban Capital Partners is the latest in a “string of managers to return some client money as stock markets have rallied.” This according to a recent article in The Wall Street Journal. While the firm says it remains optimistic about the market environment, its plan to return some client money from its oldest fund will allow for the “continued flexibility to compound capital over the long run.” The article cites comments by Greg Dowling of Fund… Read More