Comments on: So were hedge funds that bad in 2008?

By: admin

admin — Fri, 23 Jan 2009 01:15:16 +0000

Hmm well yes, hedge funds are probably not the right name, that is how they started, but most categories I would do not pretend to hedge against anything. Long/short and market neutral funds would…but a emerging markets fund would generally be long only… not sure we need to change the name though?

By: the weakonomist

the weakonomist — Thu, 22 Jan 2009 03:48:33 +0000

The thing about hedge funds in 2008 is that we learned “hedge” means squat. 10x leveraged sub-prime loans are not hedging against anything. A hedge fund should be like insurance, works in the good and the bad.

What we now think of as hedge funds should simply be ditch funds. The hedge fund brand is tainted, so now we need a new name.

By: Hedge Funds - Mutual Funds For The Super Rich

Hedge Funds - Mutual Funds For The Super Rich — Mon, 19 Jan 2009 20:44:16 +0000

[...] Intelligent Speculator Let’s compare the total return of hedge funds, -19,07% to the return of the S&P 500, which was -38,49%! [...]

By: Praveen

Praveen — Fri, 16 Jan 2009 15:52:05 +0000

The only thing to be wary about hedge fund indexes is survivorship bias.

The Credit Suisse/Tremont Hedge Fund Index says:

“In order to minimize survivorship bias, funds are not excluded until they liquidate or fail to meet the reporting requirements.”

So, it minimizes it, but it is still there.

In a market like we are experiencing, we don’t know how many hedge funds started off on the index, and then stopped reporting or liquidated.

What if 8-10% of the funds on the index at the beginning of the year stop reporting, and they finished worse than 19.07%?

So, a hedge fund investor, on average, could have experienced a worse return.