the big problem with most Hedge Funds is...

Discussion in 'Trading' started by chipmunk, Sep 30, 2009.

  1. They are too big. I take my hat off to someone making 15%+ on a 1Billion$+ but for me anything above $50M you aren't going to get much more than 15%-18% p.a. You simply have to diversify too thinly.

    but I guess the profits on $1billion+ are so big you only have to make 15% p.a (only LOL)

  2. disagree, global macro markets are very large and liquidity is quite good in major markets.
  3. OK but a guy trading $10M will always (if they are both good traders of course) always beat the fund with billions $$'s, % wise, simply because he is much more flexible.

    that's my point.....once you ge to a certain size you lose your flexibility.
  4. zdreg


    in spite of claims to the contrary by makloda after fees and expenses hedge funds under perform the market,
  5. ^^ Not all ^^
  6. Wrong. They outperformed a long only stock investment after fees and expenses on a RISK ADJUSTED basis, i.e. weighting returns vs. volatility.

    You have posted your OPINION numerous times, yet you failed to ever support your opinion with any type of fact, statistic or annualized return numbers.

    Here's the CSTR HF Index (accounting for all fees and expenses) through August 2009:
  7. zdreg


    unfortunately as in past you will justify not including taxes. in addition there is the survivor bias in that funds which have closed or merged are not used in calculation returns.
  8. Pekelo


    ...connected, thus there is no real diversification. See Peter Schiff's performance last year....
  9. 1. Not all investors pay taxes. Endowments or offshore investors do not pay taxes. Taxes differ country by country.
    2. Is the Credit Suisse/Tremont LEA Index affected by survivorship bias?

    Most indices are affected by some form of survivorship bias. In order to minimize this effect, the LEA Index does not remove funds in the process of liquidation, and therefore captures most of the potential negative performance before a fund ceases to operate. If a fund begins to liquidate, its performance remains in the LEA Index until it fully liquidates and ceases to operate, at which time it is removed because it no longer meets investability requirements. Please see the Methodology section of this website or the Credit Suisse/Tremont LEA Index Rules document for additional information.

    Your original statement "Hedge Funds always underperform their benchmarks" is overly board and not properly substantiated.
  10. Index does not fully adjust for Madoff's losses, although technically Madoff was not a hedge fund. Which, proves the point that HFs are so poorly regulated that the CSTR HF Index is inaccurate.
    #10     Sep 30, 2009