TWI
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jmreeve said:
There you go, basically not that much to write home about.
What most people should remember is that Hedge Funds are nothing but another subtle way for the Banks/brokers to transfer wealth out of client pockets into theirs. This is why the big banks have suddenly started to buy out some of the larger managers because they didn't realise what a cash-cow their operations had become.
The 2 & 20% fees are only half the story, think about fees from clearing, lending, commissions etc - so many ways in which to expertly skin and skim the investors even if the fund never makes a penny..
Also be very aware of any Hedge Fund indexes because they're not worth the paper they're printed on. Reason is simple, losing funds are quickly closed down and removed from the index. Imagine how much better the year on year gains in the FTSE 100 would be if the top 10 losing stocks were taken out and replaced with stocks that went up.............
Got to hand it to Wall St and other financial centers.
TWI
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Yeah, maybe that is why there have been many publications that attempt to discredit the ratio.
There is little doubt that this year is a hedge fund disaster and despite this fact as Anley pointed out the established hedge fund managers will still walk away winners on management fee and incentives alone.
jmreeve
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I think there is too much money starting to go into these funds.
Suspect we will see years of underperformance form hedge funds all following similar
strategies. Then at some point, someone will come up with the bright idea of getting better returns
by not wasting money on trading comissions and we will see a return to buy and hold funds.
Suspect we will see years of underperformance form hedge funds all following similar
strategies. Then at some point, someone will come up with the bright idea of getting better returns
by not wasting money on trading comissions and we will see a return to buy and hold funds.
twalker said:
I love that, see how clever the marketeers are these days. An old, established and prudent algorithm of looking at risk adjusted returns doesn't 'perform' too well with many of today's funds.
So let's smear it, discredit it and basically try to eradicate it from investors minds.
PS. I think the Man funds all get charged futures brokerage at $25 a round turn. Why so much when even somebody with $5000 can get around $5. See what I mean about the managers looking after themselves even if the fund never makes a penny for investors.
If you invest in HH then you MUST check the small print and see what sort of commissions are being levied. And if very high, that should be a major red light.
TWI
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It just attempts to compare the overall return with the volatility of that returns.
Obviously a positive return over time is what you are looking for but if that comes from a string of 100%+ some months and 95%- others it will be very different to a steady return that never varies month on month by more than 5% up or down. Which would you give your money to?
Asset allocators always prefer the low volatility returns and will tend to allocate more easily to these even if net return is considerably less than those of the volatile program.
Sharpe ratio is just a measure designed to show this as a figure.
Obviously a positive return over time is what you are looking for but if that comes from a string of 100%+ some months and 95%- others it will be very different to a steady return that never varies month on month by more than 5% up or down. Which would you give your money to?
Asset allocators always prefer the low volatility returns and will tend to allocate more easily to these even if net return is considerably less than those of the volatile program.
Sharpe ratio is just a measure designed to show this as a figure.
