BBRG: Financial Crisis Killed Hedge-Fund Performance

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The Financial Crisis Killed Hedge-Fund Performance
The industry never came back from the “Great Reset,” the huge sell-off during the first quarter of 2009.
Bloomberg, September 17, 2018

 

 

I mentioned last week I was perplexed by the idea that Hedge Funds, who as a group had generated reasonable (but expensive) out performance pre-crisis (see charts below), suddenly lost their mojo.

Why?

There are a few credible theories:

1. Dilution
1b. Fat head, long tail
2. Size is an issue
3. Size removes incentives
4. Groupthink
5. Recency effect/bad timing

Finally, my own theory is the GFC operated as “the Great Reset.”

You can read all about it here…

 


Source: Bloomberg

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I originally published this at Bloomberg, September 17, 2018. All of my Bloomberg columns can be found here and here. 

 



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