As above. I can think of the following reasons.
- depressed interest rates fuelling indices - it's hard to compete against the S&P 500 when it's doing abnormally well
- hedge funds are liquid - liquidity premium is expensive
- hedge funds purportedly do well in market downturns as well as in bull markets
- private equity funds require investors to lock up their capital. This is something that hedge funds don't require
My final question is - if hedge funds are doing so badly, why aren't their investors pulling all of their money? Yes, capital is being withdrawn, but not at a scary rate. Not at a rate that questions the existence of the hedge fund industry itself.
Would be interested to hear what all of you monkeys have to say.
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