Why So Many Hedge Funds Sucked Wind And Underperformed In 2010

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The average hedge fund returned 10.5% in 2010 according to Hedge Fund Research, which is well behind the S&P’s 15.06% (via MarketFolly).

Of course, not all hedge funds are trying to beat the S&P, but beyond that, it should be pretty obvious why they were, as a whole, such a laggard last year: The only real winning trade was to be straight-up long, and ideally leveraged.

Market neutral, long-short, etc. was all a loser because it was so toxic to have anything short-oriented in your portfolio (outside of a few rare exceptions).

Anything complex or subtle probably underformed straight up going long stocks.

According to Hedge Fund Research’s stats, notable laggards included Paulson, Citadel, and Paul Tudor Jones.

Read more details at MarketFolly >

And click here for the 21 worst hedge funds of 2010 >

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