Performance of the hedge fund indices has been dull, dull, dull

Date: 27 May 2015

Bumblebee Design

Stanhope Capital’s CIO Jonathan Bell gives a brief analysis of the new trends in the sector.

There hasn’t been much media buzz about hedge funds lately. What’s the reason?

I am not surprised to hear less talk about hedge funds. Over the past five years most other asset classes (bonds, equities and real estate) have generated good returns whilst the performance of the hedge fund indices has been dull, dull, dull.  As always, a few managers have performed extremely well but they have been the exception. The majority of funds continue to levy high fees which eat into performance. Many of the highest income earners in the UK and US last year were hedge fund managers, some of which earned huge fees despite lacklustre performance. If Fred Schwed, a professional trader who lost his money in the 1929 crash, was alive today I am sure he would ask questions of the hedge fund world.

What trends do you see in the hedge funds sector?

It is still possible to find funds that can add value by running long and short positions and are prepared to do so at a competitive price. Some, such as Standard Life’s Global Absolute Return fund and Aviva’s Multi-strategy Target Return reflect the hedge fund sector becoming more institutional.