Posted on 12/24/2015 8:44:11 AM PST by SeekAndFind
It has been an ugly year for the hedge fund industry.
As a group, hedge funds have posted dismal returns. The average hedge fund is down 3.72% this year, according to Hedge Fund Research.
The S&P 500, a commonly used benchmark to compare hedge fund performance, is down 2.59% this year.
There have been numerous highly publicized hedge fund closings and redemptions in 2015.
About 257 hedge funds closed in the third quarter, according to a report from Hedge Fund Research. That's up from 200 in the second quarter, which ended June 30.
That took the total number of hedge funds liquidated to 674 through the first nine months of the year, up from 661 during the same period in 2014, the report said.
Multiple well-known funds have been affected. Fortress Investment Group said in October that it would close its macro fund, for example. And in November, Tiger Veda Management said it was shutting down after 11 years in business.
Don Steinbrugge, a managing partner of the Richmond, Virginia-based Agecroft Partners, a marketing and consulting firm for the hedge fund industry, told Business Insider that hedge fund closings tended to pick up for three key reasons.
(Excerpt) Read more at businessinsider.com ...
They bought high and sold low.
These guys/girls don’t know shit. They just have to know someone who runs a big mutual fund or a pension. It’s a scam
The managers of the fund got their cut off the top on the transactions, however - I presume.
Doubt it. Most HF managers get a cut of performance (typically 20%) and that’s ususally determined versus some benchmark or index.
I think they are up on the year.
So.....you think that they take 20% back from him when the fund loses money? My guess is somewhere, somehow, where there is a fund, the manager, the brokerage or admin gets a cut off the top.
The cut off the “top” is the fund’s administrative fee which typically runs anywhere from 1.0%-2.5% of assets under management. In a way many of them do “take back” the 20% because the amount of the loss gets added to the benchmark the following year (i.e. it becomes a higher hurdle to become profitable). That’s why a lot of HFs close, the benchmark for profitability becomes too high.
Thanks!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.