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.
There are a few credible theories:
1b. Fat head, long tail
2. Size is an issue
3. Size removes incentives
5. Recency effect/bad timing
Finally, my own theory is the GFC operated as “the Great Reset.”
You can read all about it here…
I originally published this at Bloomberg, September 17, 2018. All of my Bloomberg columns can be found here and here.