From the category archives:

Basics

Hedge Fund Prospects Bright for Record Growth in 2015

February 18, 2015

A persistent bull market, in part, has resulted in hedge fund performance falling short of the broader market. Colloquial wisdom suggests that investors have the potential to earn superior returns and enjoy lower fees by investing in mutual funds. In short, many outside observers believe investors are not getting what they paid for—it’s like going [...]

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Citigroup Report Reveals Serious Challenges for Small Hedge Funds

February 4, 2015

With 2014 in the rear view mirror, the numbers defining hedge fund performance are beginning to coalesce. Enter Citigroup’s Third Annual Hedge Fund Industry Operating Metrics Survey. Profits Plummet Citing poor performance, Citigroup’s report suggests that hedge fund profits dipped to just under $22 billion in 2014, compared to $31.2 billion in 2013. This represents [...]

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Flawed Logic or Brilliant Marketing?

January 20, 2015

Hedge fund managers are nothing if not innovative. Take Davide Erro, chief investment officer of the Hong Kong-based Turiya Advisors Asia, who delighted his investors by returning 17.5% of their capital investment. Turiya further pleased investors by returning north of 20% through the first 11 months of 2014. Erro reasoned that Turiya was growing at [...]

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2014: A Glance in the Rear View Mirror

January 6, 2015

Record breaking index growth (e.g. the S&P 500’s positive percentage change stood at 11.39%) in the year ending 2014,  highlighted a comparatively lackluster year for hedge fund performance, which, on average, showed modest gains averaging around 3.5%. Despite a less than banner year in terms of returns, a Pyramis Global Survey suggested that only one-third [...]

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Hedge Funds Face Continued Challenges in 2015

December 22, 2014

Several significant challenges confront the industry as 2014 draws its last breaths, not the least of which is the trend away from traditional 2 and 20 fee structures. Fee Structures No single event brought this into clearer focus than the CalPERS’ $4 billion redemption in hedge fund investments announced earlier this year. CalPERS cited high [...]

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Will Hedge Funds Supplant Venture Capital?

November 23, 2014

Hedge funds have long been the funambulists and contortionists of the circus that we call the financial sector. It was not so long ago that hedge funds pushed into real estate, purchasing thousands of single family homes in selected markets. Recently, the hedge fund industry has, once again, revealed its nimble nature by investing in [...]

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Finders Are Keepers and the Swiss Are Weepers

November 9, 2014

Joseph B. Galbraith, former principal of Florida hedge fund Galbraith Capital Investment Management Corp., has made the rogue’s list, subsequent to his apparent refusal to return $1.483 million mistakenly deposited in one of his firm’s accounts by an arguably incompetent Credit Suisse Securities (USA) LLC. The aggregate $1.483 million consisted of three wire-transfers made to an [...]

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A New Threat to Small Hedge Funds and the Less Affluent Investor

October 27, 2014

A debate brews between the U.S. Security and Exchange Commission (SEC) and the hedge fund industry about proposed changes to the current definition of accredited investor. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires this definition be reviewed every four years. The definition of an accredited investor has not changed since 1982, except [...]

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Doors Opening – Doors Closing – the CalPERS Redemption

October 14, 2014

Every action has consequences. The CalPERS divestiture will have some unanticipated consequences as well. Here are a few. Doors that May Have Closed Two and twenty was already on the rails and headed out of town before the CalPERS announcement. One of the industry’s worst kept secrets is that most large pension funds and institutional [...]

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Discount Hedge Funds – Is This the Wave of the Future?

September 14, 2014

Even ardent defenders of hedge fund fee structures must acknowledge the impact a marketplace open to retail investors may have on the status quo. Is the hedge fund 2 and 20 rule going the way of the banking industry’s 3-6-3 rule? Disruption It is no revelation that 2 and 20 has been under assault for [...]

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