Glance at a Citi Prime Finance report that fees are starting to crumble, and a casual reader might conclude that something is wrong in the house of hedge funds. Perhaps investors have begun to notice well documented problems with performance?
Pressure to offer founders’ share classes or accept seed capital to launch with sufficient amounts of Assets Under Management have pressured management fees down from the industry’s standard benchmark of 2.0%. Our analysis shows average fees for managers with less than $1.0 billion AUM ranging from 1.58% to 1.63%. Read more
The generally excellent Spencer Jakab leaves his zombie repellent behind on Monday, when he speculates in the Wall Street Journal that the formerly decent returns of the hedge fund industry will return once central banks begin to retreat from markets.
The problem is mean reversion. It may be one of the most powerful forces in the investment universe but, as we have said before, it doesn’t apply when you try to compare the zombies of the 1990s and early 2000s to the lumbering, fee eating, industry as it exists today. Read more
Two months to go to year-end, and hedge fund managers are starting to ask their staff for some ideas to get performance up before January rolls around. So how are the still-living ranks of the zombie industry doing?
Broad-based gains for October, says industry data provider HFR: Read more
Common Sense Investment Management has not joined the ranks of the walking dead, quite yet.
However, the fund of hedge funds — which until August managed $3.2bn — has seen investors pull 90 per cent of assets since the firm’s founder was arrested in connection to a prostitution sting, according to CNBC. Read more
The latest monthly performance figures for the hedge fund industry are out — and those funds still breathing had a good-ish month, up 1.6 per cent on average in September, according to HFR.
September performance was led by Equity Hedge strategies, with the HFRI Equity Hedge Index gaining +2.6 per cent, also the strongest month since January and bringing performance for the first three quarters of 2013 to a gain of +9.2 per cent, leading all hedge fund strategy indices.
But performance ain’t so hot as that put out by the industry’s legions of undead predecessors. Those cautious equity hedge funds have put up less than half the return for the S&P 500 this year. Read more
We interrupt this blog to announce a zombie apocalypse has occurred. Please remain calm and do not adjust your allocations, many hedge funds remain open and fee structures are intact.
Games of spoof can be very expensive. Just ask Mike Ashley, who reportedly lost £200,000 when playing against his advisors at Merrill Lynch. Or ask Peter Beck, the Canadian day-trading evangelist who has lost £8m to the FSA.
These are, of course, different types of spoof. While Mr Ashley used the drinking game to settle a legal bill, Mr Beck’s SwiftTrade equities trading network was — in the FSA’s judgement — spoofing the market: Read more
This, apparently, is the mathematical model for zombie infection.
With apologies to Stanley Weiser and Oliver Stone.
EXT. WALL STREET – EARLY MORNING Read more