Major Hedge Funds Performance 2021

Research
1

Major Hedge Funds Performance 2021 as per Bloomberg.

Except Senvest, Impala and SRS Investment, all underperform the S&P500.

Regards
James

Major Hedge Funds Performance 2021 - Bloomberg.jpg
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2

Interesting!

I didn‘t know this for hedge funds, but most stock-based mutual funds underperform their respective bemchmarks.

That was a motivation for me to join P123 and do my own research. :slight_smile:

3

Hedge funds are supposed to be market neutral. That’s why they’re called “hedge” funds. Their purpose is not to outperform the S&P 500, it’s to generate smooth and strong returns with few drawdowns.

Mutual funds underperform their benchmarks for two reasons. One is that investors put more money into the funds when they’re doing well and pull out money when they’re not, thus forcing funds to buy more stocks at high prices and sell them at low prices. The other is that the managers charge large fees, which come out of the funds.

I think outperforming the S&P 500 is a fine goal if you’re long only and you can control your inflows and outflows, as individual investors do. But for hedge funds and mutual funds, that’s probably not the best way to judge their success.

4

Yuval,

I have to correct you about your misconception about hedge funds.

Most hedge funds are not market neutral and are long biased. Only market neutral hedge funds are targeting market neutral exposure.

The hedge fund Numerai put together is market neutral. (target zero beta and country/sector neutral).

Here is a link on the performance of the best and worst hedge funds according to category.

https://nilssonhedge.com/flashreport/

Regards
James

5

James,
There are thousands of hedge funds. What was the selection criterium for these funds?
The average return of the 38 funds listed is 7.7%.

I track 40 funds with AUM > $3.5-B and select their 50 consensus stock holdings every 3 months. That strategy returned YTD only 4.0%. Using a ranking system to periodically select 10 from the 50 returned YTD 21.0% versus 29.0% for SPY.

So the hedge funds didn’t have a good year. Maybe next year will be better.
Happy New Year !!!

6

Georg,

The list that contains those 38 major hedge funds is put together by Bloomberg.

I also wish you a Happy New Year and hope you do better with your website and at SeekingAlpha in 2022.

Regards
James

7

James,

Thank you for posting their performance. The movement away from investing in hedge funds due to their suboptimal returns may have begun with Calpers dumping them in 2014 (https://www.reuters.com/article/us-pensions-calpers-hedgefunds-idUSKBN0HA2D120140916#:~:text=Calpers%20dumps%20hedge%20funds%20citing%20cost%2C%20to%20pull,because%20it%20finds%20them%20too%20costly%20and%20complicated.). It looks like nothing has changed.

Scott

8

Scott,

You are right to point out that hedge funds has been underperforming (by a large margin) the S&P500 for the last 10 years.

Take a look at this study and the famous Warren Buffet 10 year bet vs hedge funds.

https://www.aei.org/carpe-diem/the-sp-500-index-out-performed-hedge-funds-over-the-last-10-years-and-it-wasnt-even-close/

Regards
James

9

Hi, thanks for the link back and glad you found the site useful. There are not many funds that managed to beat the sp500 in 2021, sad but the masters of the universe simply have to wait for another year.

More colors can be found here: https://nilssonhedge.com/2022/01/02/2021-review-preliminary-hedge-fund-performance/

The underlying data is free to access