There's been plenty of market volatility in the last few weeks, as if you did 't know. That's the time the major hedge funds are supposed to justify their keep – especially as the hedge fund industry has dramatically lagged the S&P for years. According to this Bloomberg article, now is the time the funds should really shine and outperform. So what happened in August?
David Einhorn’s Greenlight Capital flagship fund fell 5.3 percent in August, putting it at –14 percent so far for 2015, according to Bloomberg News. Third Point, run by Daniel Loeb, saw a 5.2 percent decline in its main fund in August. Ray Dalio of Bridgewater Associates saw his macro fund decline 6.9 percent last month. These superstars performed more dramatically badly than the HFRX Global Hedge Fund Index, which was down 2.2 percent in August and 1.42 percent for the year. The Standard & Poor’s 500-stock index lost 6.3 percent in August and is down about 4 percent in the year to date.
The intellectual capital of the industry has dwindled away. Too many people reading the same old academic finance journals, too much “me too-ism.” But it's still good at persuading other people to let it manage their money.