Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
5 posts • Page 1 of 1
How accurate are public estimates of hedge funds' annualized returns? Recent reports gave wide ranges for the annualized returns of Citadel since the fund's inception. As hedge funds do not typically release their results, how reliable are the composite figures generated by analysis firms like Hedge Fund Research?
They are very unreliable. A lot is self reported and the hundreds of funds that close down each year create survivor bias. Also hedge funds have such differing strategies that even if you had the average you wouldn’t know much.
What you and the other respondents say is in line with all of the research I have found on this topic. Why then, with hedge funds' historically poor performance and their record of producing absolute return only for the fund managers themselves through guaranteed management fees, would pension funds for corporations, government workers, and labor unions ever allocate anymore than a tiny percentage of their assets to hedge funds?
One of the pressing questions on my mind is whether the employees contributing to these pension funds truly have a good understanding of what a portion of their money is being siphoned into? Are there standardized methods in place to ensure that pension fund participants are given regular updates of where their money is going to be invested?
One recent news story which rekindled this question in my mind was featured in the New York Times:
https://www.nytimes.com/2017/10/22/nyre ... .html?_r=0
In this case, the defendant was accused of putting $20 million of the pension fund into a high-risk hedge fund. Were members of the union given notice of this new investment before it was made?