How can hedge funds not hedge?
With Tiger, many others being down 50% YTD, many others down 30+%. These funds are down 3x, 4x the 12% that SPY is down this year. How can these funds even call themselves “hedge” funds? The very notion of the word hedge is to maybe not outperform the market but to not lose as much during downturns. Can we just admit that hedge fund is a misnomer, and that many of them should be called “absolute return funds”?
These people were leveraged long the tech sector. They made risky, speculative wagers on a sector that paid off for a decade. That is more similar to a venture capital fund than a hedge fund.
The word hedge fund has been a misnomer for decades. The name has just stuck around from when hedge funds were originally starting and did exactly as the name describes. Now it's just a name that basically describes any unregulated alternative asset manager dealing in public markets.
Some only refer to themselves as Alternative Asset Managers
Maybe they took the "private equity approach to the public market" too literally?
The best way to think of hedge funds is as products selling investors exposure to specific factors while limiting or controlling for others.
Tiger was pitching long tech, and that's what LPs got.
bc "hedge fund" refers to a compensation structure, not an asset class. case in point: funds like valueact hold like 10 long positions, don't short, don't hedge, yet are called hedge funds
This is exactly right. Hedging is not a requirement to be a hedge fund. SMs often don't hedge or hedge in a very limited way, i.e. "long-biased". MMs tend to hedge more aggressively, i.e. "market-neutral". Some hedge funds, especially in distressed, invest more like PE funds than anything else. I operate in the rates space and some funds are essentially long duration, and other funds have tight DV01 limits. It's a big world out there.
Lunch is for wimps...and so is hedging.
Delectus est vel et qui velit. Cum blanditiis sunt voluptates reprehenderit quia nesciunt. Quo rem repellat magnam nulla suscipit. Velit maxime deleniti eaque fugit omnis pariatur cupiditate.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...