Hedge-Fund Dazzle Has Peaked, Record Closures Next

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Hedge-Fund Dazzle Has Peaked, Record Closures Next
by Wolf Richter • January 11, 2016


[font color="blue"]This data “will be met with dismay by the hedge fund industry.”[/font]

“Alternative Investments” were the Holy Grail. They promised big returns that would be independent from the gyrations of the stock and bond markets. Hedge Funds and Private Equity firms marketed them to wealthy individuals and institutional investors, such as pension funds.

“Feel the power of Alternative Investments – B.A.M.” That’s how Credit Suisse advertised it on its website back in October 2013. It was so irresistible that I took a screenshot of the ad, to be used at an opportune moment, and now is that moment:



This was the heyday of Alternative Investments. QE Infinity was making everything possible. Yields on bonds had plunged to near nothing. Prices of most assets were soaring. Risks no longer existed and hence weren’t priced into anything. And anyone could make big returns. But that’s like so 2013….

“Low interest rates, steep commodity losses, and intense equity market volatility contributed to a challenging environment in 2015, resulting in a wide dispersion between the best and worst performing funds,“ explained Kenneth Heinz, president of Hedge Fund Research (HFR) in its report about the hedge fund debacle that 2015 had become.

So hedge funds across the $2.9 trillion industry were in the red for December and ended the year 2015 down 0.85%, according to HFR’s fund-weighted composite index. It was only the fourth year since 1990 that the index ended up in the hole. ..................(more)

http://wolfstreet.com/2016/01/11/the-era-of-hedge-fund-dazzle-has-peaked/