Apr 02, 2012
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Hedge Funds
In professional settings, seven years is considered enough time to constitute a relevant performance comparison because it usually encompasses different kinds of markets.
Recently there has been press about how hedge funds did not beat Treasury Bills during the last cycle. We will not be so kind. A 60-40 stock-bond index is a reasonable comparison benchmark. Yes, it is U.S. based but it is a very plain-vanilla option and it is not considered an especially difficult benchmark to beat over the longer-term so this is not exactly an unfair comparison.
Next Blog: Q1 2012 Index Ranks vs History Chart
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Jan 08, 2012
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The issue of which index to use as a performance benchmark is rarely all that clear. One thing that is clear -- hedge funds had a terrible year in 2011. The Bloomberg hedge fund index was -4.9% in 2011. The HFRX Global Hedge Fund index was -8.9% in 2011. The HFRX long-short equity index was down a staggering -19.1%. Meanwhile, a standard 60-40 stock-bond balanced return using index funds was +4.1% for the year. Below is the breakdown by quarter:
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Dec 18, 2010
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Hedge Funds
Two interesting news items this week:
U.S. ETF assets broke through $1 Trillion in assets for the first time this past week. Global Head of ETF Research and Implementation Strategy at BlackRock Deborah Fuhr said in a press release:
“Increasingly both retail and institutional investors are building global, multi-asset portfolios that are designed to capture the performance of key ‘benchmarks’ for attractive market sectors -- an application for which ETFs and ETPs are particularly well suited,” Ms. Fuhr said.
Dovetailing nicely with Ms. Fuhrs quote above --- there was a report late in the week that highlighted the extensive use of ETF's by former Fidelity Magellan portfolio manager and long-time hedge-fund manager Jeff Vinik.
As an institutional investor, Vinik must disclose holdings and his September 30, 2010 13-F from his SEC filing is summarized below:
Looking over Viniks holdings, the exposures are specific: U.S. sector tilts, U.S. Small Cap, and Emerging Markets exposure. Note that SPY is the only of Viniks ETF holdings that is a diversified U.S. large cap index. 10 of the 11 other ETFs represent targeted exposures.
In the grand scheme of things, $1 trillion in assets is still a drop in the bucket --- ETF/ETN assets are poised to head dramatically higher over the next 3-5 years.
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