Investors Lose by Chasing Top Performing Hedge Fund Strategies

Being rich doesn’t necessarily make one financially savvy. Annie Liebovitz defaulted on a loan she had almost no chance of paying back. Elie Wiesel, Mort Zuckerman and New York Mets owner Fred Wilpon were among Bernard Madoff’s victims. The Yankee’s Johnny Damon and Mets pitcher Mike Pelfrey were among the baseball players suckered into buying Allan Stanford’s CDs. And now we know the wealthy chase returns, just like poor schlubs. How so? On Aug. 18, HedgeFund.net released its report on second quarter 2009 money flows in and out of hedge funds. Inflows into managed futures, a strategy that flows the trend in commodities, foreign exchange and other futures contracts, were up 3.14% from April through June, number three overall. (Top-ranked emerging markets were up 6.5%.) Assets at convertible arbitrage funds, which attempt to profits on price discrepancies between convertible bonds and stocks, fell 9.16%.

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