Are high-flying hedge funds really serving their purpose if they are vastly underperforming during a bear market?
https://www.ft.com/content/87347d49-390d-408b-9059-2e5a42b5787c
Tiger announces yet another down quarter. If you ask why hedge funds underperform S&P, you get justifications saying that it's because they are products for institutional investors and will do better during bear markets aka a "hedge." Obviously Tiger isn't representative of all funds but it's defo contrasting the image that everyone makes about hedge funds being sophisticated products to protect a whale's portfolio during a downside.
Tiger's recent performance has certainly made people change their opinions of these 'prestigious' single manager L/S funds. IMO, HFs should be more or less pure alpha vehicles (i.e., run little to no systematic risk). Beta timing works until it doesn't...
The multimanager platforms are great at doing this (actual idiosyncratic alpha) and there are others who are less in the headlines who profit handsomely in all or most market environments.
I think Tiger is seen as "prestigious" because of the lifestyle people assume from the outside. Nice office overlooking Central Park, seeing green in your portfolio most of the time, flying out to SF to meet founders of exciting startups, lots of media attention and everyone wants your opinion on their tech stocks (and for the past few years most of your picks have been right), etc. However, MMs aren't great places to work but are great for investors. To be fair, the big MMs these days actually fit the "hedge" fund definition.
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