Hedge Fund Excuses
Hedge funds offer a service. A most valuable service to be sure. Generally speaking, they offer the opportunity to profit in all types of markets. The idea is to profit, even when everyone else isn’t.
And it all worked…until, of course, it didn’t. Apparently, “all types of markets” doesn’t include the exact time a hedge is useful — when everyone else is hurting.
In fact, their excuse is that all of the other hedge funds are being forced to liquidate the same securities they hold in their portfolios. Their performance is not their fault — the problem is that everyone else has the same securities as them.
So what happens when they have good performance? Did they just front run other hedge funds?
In addition, if all of the funds hold the same securities, what are investors paying for? Is it really worth it to pay 2-and-20 for a common strategy?
