The Hedge Fund Comeback Looks Like the Real Deal
Investors are once again allocating cash to the industry. Stock pickers need to stay on top of their game to keep those flows coming in.
Riding the recovery
Photographer: Bloomberg
Hedge funds are rediscovering the secret of alpha generation that made them masters of the financial universe in years past. The renaissance of the swashbuckling gang adds welcome color to an asset management industry that’s been threatening to fade to gray as passive index trackers charging little to no fees take over the investing world.
Hedge funds are poised to post their best average returns since at least 2014. By mid-year, they were up 9.29%, a very favorable comparison with losses of more than 3% at the same point last year after the pandemic trashed stock markets in March of 2020. Not surprisingly, the stellar performers have been long-only equity funds, delivering more than 19% through June. That outstripped the 12% increase in the MSCI World Index of stocks, suggesting that for once they earned their fees.