http://www.ft.com/cms/s/0/5111ddba-f5ac-11de-90ab-00144feab49a.html?nclick_check=1 http://dealbook.blogs.nytimes.com/2010/01/04/hedge-funds-finish-2009-with-a-bang/ Hedge Funds Finish 2009 With a Bang January 4, 2010, 6:54 am For the global hedge fund industry, 2009 marked one of best years of performance in close to a decade, The Financial Times reported, citing industry data. On average, hedge funds booked 19 percent returns last year, according to Hedge Fund Research. (The newspaper noted that other leading hedge fund performance trackers showed average returns of between 12 and 18 percent, after fees.)
You call "that" a bang? It confirms the fact that those same investors would have been better off to have been passively invested in the S&P or QQQ's instead. What a lovely racket!
Typical shortsighted viewpoint. Perhaps we should be comparing over a longer timeframe....perhaps a 10 year period? http://www.bloomberg.com/apps/news?pid=20601087&sid=azRby9JhxPH0 "Investors who put $10,000 in stocks on Dec. 31, 1999, have $9,090 now, while the same amount in 10-year Treasury notes would have grown to about $18,000 following a 6.1 percent annualized return, according to data compiled by Bloomberg. A $10,000 investment in the Reuters/Jefferies CRB Index of 19 raw materials increased 3.3 percent a year to $13,803. Gold futures rose 14 percent a year, turning $10,000 into $37,852. The average annualized return for U.S. equity mutual funds was 1.7 percent during the decade. Only one fund out of 3,833 gained in 2008: Forester Value Fund rose 0.4 percent that year, according to Chicago-based Morningstar Inc. Hedge fundsâ annualized return was about 6.3 percent since Dec. 31, 1999, according to Hedge Fund Researchâs HFRI Fund Weighted Composite Index. The measure rose 19 percent in 2009 through Dec. 15." âThose who benefited in the decade were short-term investors who were able to take advantage of the volatility in the stock market,â said Komal Sri-Kumar, who helps manage $118 billion as chief global strategist at TCW Group Inc. in Los Angeles. âThat isnât the signal authorities should give players in the market. You want them to think of it as a place where you can save for your retirement.â
1) Take all the time you need to find an optimal holding period for your "asset class" of choice. 2) Many managers will tout their 2009 performance but not their 10-year average in the near future.
You'll find the same thing when testing a system against stocks this year... I noticed that historically poor stock systems are being rewarded extremely well this year, but when you test the systems that are working well this year against a 5,10, or 20 year horizon, mostly have a garbage performance. I found that the ones that did traditionally well in the past, are mostly in cash through this rally. I can only assume that this Market aside from a bear market rally, has provided a kind of once in a generation freebie for those using less than stellar systems... Jim Simons pointed this out imo in one of his monthly letters posted on Scribd, way back in May. His equity system doesn't respond well in this kind of flimsy, questionable rally, but does outperform in the months after.