This morning Wall Street’s buzzing about Bloomberg Markets Magazine’s annual list of 100 best big hedgefunds of the previous year (big meaning more that $US1 billion assets under management).
Part of what stands out about it is the huge gap between how well the best hedge fund did, and the year’s average hedge fund performance.
In 2013, the average hedge fund was up 8.2% through December. Bloomberg’s list puts Larry Robins’ Glenview Capital up 84% through October.
Overall, it’s an improvement over last year, when the best hedge fund, Deepak Narula’s Metacapital Management returned almost 40% betting on mortgage bonds, while the industry’s average was a 1.3% return.
But it’s still not great.
Glenview’s strategy was to go into stocks and go in big — a strategy that worked for the funds that had the stones to try it. For its part, Glenview specifically targeted healthcare stocks knowing that the Affordable Care Act would give them a boost.
Only 16 hedge funds on Bloomberg’s list out-performed the S&P, which closed the year up about 30%.
Only 16 hedge funds ignored the bears, levered up, and let stocks take them.
Sounds kind of scary, actually. Who’s not afraid of a bubble?
One more thing — even thought this average performance is pretty dismal, investors are still pouring money into hedge funds. According to a report from eVestment, industry assets are at $US2.8 trillion, which is only 3% from an all-time high.
Moreover, industry inflows in November were at $US71 billion, almost double last year’s.