Hedge funds were the darlings of the investment world back in the 2008 stock market crash: some claimed that their ability to trade in and out of various financial assets allowed them to rack up big gains while everyone else was suffering. Investors who were wary of stocks after the bear market flooded into hedge funds.
The bloom is off the rose, according to a report in The New York Times. Hedge funds are closing their doors at an accelerating rate after six years of substandard performance. The Times reported that the average hedge fund returned only 3 percent last year, compared with double-digit gains for U.S. stocks.
Three funds that spun off of the once-famous Tiger Management hedge fund group have announced they are closing this year. The Times said the funds were returning money to outside investors and will concentrate solely on investing their owners’ money.
Richard Schroeder, CFP®, May18, 2015