Not many people are able to invest directly in hedge funds. And that’s not necessarily a bad thing.
Through Q3 of this year, hedge funds on average have returned a measly 6% year-to-date.
This is according to Goldman Sachs latest Hedge Fund Trend Monitor report, which examines the performance of 783 hedge funds with $US1.7 trillion of gross equity positions.
This year’s hedge fund returns compare with a 25.3% gain in the S&P 500. Even mutual funds returned 24.8%.
Interestingly, hedge funds have actually been pretty good at picking long positions. From Goldman Sachs: “Our Hedge Fund VIP list contains the 50 stocks that appear most frequently among the top 10 holdings of fundamentally driven hedge fund portfolios. The basket has returned 30% YTD, 330 bp better than the S&P 500… The top 5 stocks are AIG, AAPL, GOOG, GM, and C, the same as the last two quarters.”
However, many hedge funds take short positions to hedge their long positions. This has offset what could’ve been a great year for the industry.
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