Investors Pull $28 Billion from Hedge Funds

Note: This is not financial advice.

It’s not looking good for hedge funds. Investors pulled nearly $28 billion in the second quarter, disillusioned by poor performance.

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From a new Reuters report:

Amid high volatile [sic] across markets, investors redeemed $27.5 billion of hedge funds between April and June, bringing total withdraws in the first half of the year to $7.7 billion. No hedge fund category lured fresh money from investors in the second quarter.

Total assets ended the second quarter at $3.8 trillion, down roughly 5% from March, [data provider HFR] said, also battered by the funds performance. The fund weighted composite index is down 5.78% in the year, HFR said.

This has been a long time coming. Hedge funds have consistently underperformed the S&P 500.

From Axios:

Why, in the name of all that is holy, do people leave a dime in these things? You can get a Vanguard S&P 500 index fund for 0.04% a year.

I own a bunch of shares in that fund myself. It beats paying a hedge fund 2% of assets and 20% of gains for rotten performance!

One of the most astute investors in the market, the California Public Employees Retirement System (CalPERS), pulled every cent from hedge funds 8 years ago.

But the pension money of far too many hard working Americans is still in these putrid investments.

If the smartest guy at the table just got up and left, why is anyone sticking around?

Hedge funds have an aura about them. Geniuses in glass towers pulling the strings of markets.

But the emperor has no clothes. And to quote Gordon Gekko:

What do you think of hedge funds? Leave a comment at the bottom and let me know.

Have a great weekend everyone!

More on markets:

Wall Street Banks Turn on Each Other as Federal Probe Looms

AMC Fails to Deliver Hit 9.7 Million

Bill Ackman Loses $4.8 Billion

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Photo: “the emperor has no clothes” by nevermindtheend is licensed under CC BY-NC-ND 2.0.


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