CFA calls out hedge fund underperformance.

The CFA is hating like a city cop!

https://blogs.cfainstitute.org/investor/2015/10/2…


In short, hedge fund performance as a group has been a complete disaster over the past five years,” Bianco said. “So, to earn the standard 2% and 20%, and outperform the index, managers have to be extraordinary. The problem is that there are probably only about 500 extraordinary managers in the world, but there are 11,000 hedge funds.” Active managers have also fared badly. “Over the past 10 years, 76% of active managers underperformed
 
Best Response

Did the CFA not teach this guy how to analyse investment performance?

In the first section, he criticises collective hedge fund performance and states that their performance is a complete disaster. To anyone who is worth anything in the investment space, this is a meaningless statement and filled with utter stupidity. You cannot just clump all hedge funds together and then compare them to a single benchmark. I haven't read the entire article, but in the first section where he states that hedge fund performance is disastrous, he doesn't even mention what benchmark he us using?

I can't take the CFA seriously.

 

Although, It is worth mentioning that his criticism is warranted with regards to some equity L/S hedge funds. There is no excuse for the mountain of stupidity and laziness at some of these funds. The recent VRX fiasco is an excellent example of this. Funds like Pershing Square and Ruane, Cunniff and Goldfarb, have put approximately 25% of their portfolios into a single investment. This is pure greed and hubris, as well as a disregard for investor's funds.

 

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