I don't understand ... What about this market that is causing problems for hedge funds? I was always under impression that they thrive on volatility. Is this just yellow journalism? https://nypost.com/2018/12/16/major-hedge-funds-are-scrambling-to-prevent-financial-wipeout/
"only when the tide goes out do you discover who has been swimming naked"? "Hedge fund" is just one of many strategies. One smart thing Jim Kramer once said, "... during a bear market, we'll find out who the talent really is and who is a no-talent-hack-that-never-had any-business-making-money-anyway..." IOW... the Fed put and a long side bias allowed many to make money when they had the "wind at their back". We're starting to see how they do when the rain is in their face.
Probably some smaller ones, and prop firms / market makers like Virtu, and a couple masters like Rentec. The 10,000+ other hedge funds simply buy and hold, and can't even beat an average Joe holding SPY. You can't trade with $100B+ anyway, if you run a large hedge fund. If you just make one $2B short trade (2% of account), the effect would be similar to a $2B hedge fund closing instantly. And if you made a few trades and only 100 large hedge funds also traded such amounts daily, the current volatility would be child's play. And no hedge funds can trade with much risk, so volatility may not help them. But prop firms may like it.
I think part of this is poor performance, but the model and the tax laws now favor a family office for many uberwealthy investors. It will be curious to see where permanent money(endowments and pensions move to)goes - looks like it changing the mix for more VC and PE.
I never thought I would ever say this but Kramer is right... Easy making returns with QE at your back, you could pick anything and go up with it, in bear markets, it can take 20-30 hours to produce a thesis just for one play cause you have to be much sharper... In any circumstances you have to put a lot of hours even in bull markets, everyday reading and analyzing historical data, news, momentum, charts of your chosen sectors companies... But when things get ugly, the machines stand out more I think it comes down to hours put in really, work ethic eliminates fear
The poor performance is in big part due to the unsustainable push for large capacity and economy of scale. Used to be that a PM group making 20-25 is "big", while these days a large platform wants 50 and over just to consider you. It's the same story all over again - some equity L/S dude makes a name for himself managing a couple hundred, gets several billion of AUM and fails to deliver anything even close to his former results. Did he really lose his alpha? No, it's that his choices are now Apple and Amazon instead of the thousands of mid-cap names.
I heard complaints about low stock market volatility in 2017. I heard complaints about high stock market volatility in 2018. I wonder why hedge funds which performed so well during the U.S bear markets from 2000-2002 are under-performing badly in the bull market which started in 2009 and doing worse in the bad market in 2018. We can't even call 2018 a bear market because Nasdaq is still positive for the year 2018. https://nypost.com/2018/12/16/major-hedge-funds-are-scrambling-to-prevent-financial-wipeout/ As hedge funds fall like dominoes (and returns underperform the S&P 500) managers also blame a sharp rise in stock market volatility and low interest rates.
I don't even have to read the article to tell you that the NY Post is a rag. It is the National Enquirer of NY newspapers. Like the NY Daily News. Jokes.
too bad the rain in their face won't last long enough to make a lasting impression on these hedge funds, the reason is because the Fed is even less independent of political pressure than in prior years,
%% I'll take your word for the data; +QQQ had a YTD gain of oo.53 %[close today] Feel free to call that positive -it is.And if 200 dma is good measure for a bear+ it is;SPY closed[-4.74% YTD, today. One asset manager noted in WSJ, we weren't surprised in FEB, 2018 { WSJ article MAR 2018, top 100 asset managers } [I think] .We were surprised it[downmove] did not happen more. LOL