Hedge fund absolute return?
Absolute return? Depending on which hedge fund "index" you bother to follow, hedge funds as a group have had either a poor year or a terrible one. So what? I only track GOOD hedge funds, a tiny proportion of the universe. In reality proper hedge funds did exactly what they were designed to do - generate superior RISK-ADJUSTED performance. It is not a hedge fund's function to outperform some benchmark. The job is to produce an absolute return.
Compared to the USA equity indices, hedge funds beat the market while compared to most of the European and Asian indices, hedge funds underperformered. If pure performance is what matters why bother with American stocks or 20% from Western Europe or even 40% in Japan or India when you could have doubled your money in Colombia or Egypt. The Kazahkstan index tripled, Palestine quadrupled and Zimbabwe went up 1,500%. Those impressed with the Dow breaching 11,000 again should note that the Zimbabwe Industrials is currently at 28 million. Performance chasers and rear view mirror investors climb aboard the Zimbabwe "bull market".
As for the rest of us, why aren't we opening up brokerage accounts in Harare, Cairo and Bogota? I've used brokers in those cities for many years but for small security specific positions. Maybe it has something to do with risk? Perhaps the newspapers of Almaty and Ramallah are now carrying articles on why "international" investing is unnecessary when local stocks are doing so well. English language media make that argument all the time during bull markets, usually close to the top.
Why bother with hedge funds that aim to make a blended return of 10-15% or so when you have the chance of higher returns owning stocks? Simple. If you compare the rewards versus the risks, competently managed hedge funds beat EVERY country's stock market index by a massive margin EVERY year. They always have and they always will.
Compared to the USA equity indices, hedge funds beat the market while compared to most of the European and Asian indices, hedge funds underperformered. If pure performance is what matters why bother with American stocks or 20% from Western Europe or even 40% in Japan or India when you could have doubled your money in Colombia or Egypt. The Kazahkstan index tripled, Palestine quadrupled and Zimbabwe went up 1,500%. Those impressed with the Dow breaching 11,000 again should note that the Zimbabwe Industrials is currently at 28 million. Performance chasers and rear view mirror investors climb aboard the Zimbabwe "bull market".
As for the rest of us, why aren't we opening up brokerage accounts in Harare, Cairo and Bogota? I've used brokers in those cities for many years but for small security specific positions. Maybe it has something to do with risk? Perhaps the newspapers of Almaty and Ramallah are now carrying articles on why "international" investing is unnecessary when local stocks are doing so well. English language media make that argument all the time during bull markets, usually close to the top.
Why bother with hedge funds that aim to make a blended return of 10-15% or so when you have the chance of higher returns owning stocks? Simple. If you compare the rewards versus the risks, competently managed hedge funds beat EVERY country's stock market index by a massive margin EVERY year. They always have and they always will.
© posted by Hedge Fund on 3:36 AM
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