Hedge Fund Returns {Not A Thing Of Beauty!}

From Bloomberg:

"Hedge funds trailed the Standard & Poor's 500 Index {SPX}for the fifth straight year as U.S. markets rallied to record levels.  Hedge funds returned an average of 7.4 percent in 2013, after a gain of less than 0.1 percent in December. The Bloomberg Hedge Funds Aggregate Index is down 1.8 percent from its July 2007 peak. The index is weighted by market capitalization and tracks 2,257 funds, 1,264 of which have reported returns for December.  Funds lagged behind the S&P 500 by 23 percentage points last year, the most since 2005, as the U.S. benchmark surged 30 percent for its best performance since 1997."  

Look I know that hedge funds along with most asset allocation strategies will trail the US markets in a year when the melt up like 2013.  But I believe when you're charging your clients a 2% management fee plus 20% of the profits that the investors deserve better than that!  I think you're going to start to see pressure on fees in the hedge fund universe if this keeps up.

*Long ETFs related to the S&P 500 in client and personal accounts.

Link:  Bloomberg:  Hedge Funds Trail Stocks for 5th Year with 7.4% Return.