Majority of the HFs are outperformed by low index funds over the course of 3-5 years . In addition to this , the high management fees and performance fees are also a matter of concern . So what is the future outlook of HFs from 15-20 years from now . Is their existence in a big question ?
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In my opinion all these funds dominate in cycles. I feel like in the next 10-15 years the funds that are new now e.g (Holocene, D1,Anomaly, Skye Global) will be the faces of the HF World. As far as the Hf space as a whole,investing in the public markets will always be around. There will always be young talent willing to bet on themselves and invest in the public markets whether L/S, global macro, etc. Just my 2 cents take it with a grain of salt.
Thats highly probable. As far as I'm concerned majority of the funds will evolve into quant funds { I might be wrong } and will there be any analyst positions for non-quant portfolios , where traditional ERs/AMs guys can get in and climb the ladder way up to the PMs
In my opinion fundemental/disctretionary investing will always be around. Investing is an art not a science.
Sorry to sound juvenile but when you say “non-quant portfolios” what do you mean by this?
There will always be a demand and for top-performing hedge funds. Also, hedge funds aren't supposed to outperform the S&P500, most are ~60% long. Therefore, they should underperform in a raging bull market.
That being said there are a large number of mediocre hedge funds, and they’ll likely die off.
Do you think that the existing HFs will transition into an asset management firm , where they will hold blue chips and cash in those dividend cheques . And whats your view on QUANT FUNDS
I think it's natural for hedge funds to expand into AM once scale becomes an issue you see Bridgewater doing this.
Quant fund is a broad term. However, I repeat my comment from above, good once will stay and others will fall off.
hedge funds will probably still exist. the end of hedge funds has been literally written about for 50 years and it has not happened
the premise of your question "outperformed by index funds" is also incorrect - most funds are supposed to be hedged and many run market neutral. when you have a 15 year bull market, passive investing looks great, but tough to say whether that always holds
also most hedge funds complement index fund or mutual fund allocations to LPs - they don't necessarily replace them. an endowment isn't investing 100% of their funds into alternatives
Quia qui et ullam corporis. Eum et distinctio fuga amet.
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