Hedge funds appear to be an answer. They specialize in the opportunistic movement between different classes of assets. Theoretically, they should easily surpass both shares and bonds.
Unfortunately, records of a typical Hedge Fund show differently.
Last year was the case. The traditional balanced portfolio that allocates 60% of the shares and 40% of bonds has brought a return of 14.7% (assuming that part of the shares is invested in a wide fund of the US market section, and part of the bond is invested in the overall US Bond Market Index Fund) . This is almost twice as much as 7.4% of the return of the Eurekahedge assets index, described by Eurekahedge as his “leading weight of the weighted property” of 1,438 components. This index, adds Eurekahedge, is “designed to provide a representative reference value of capital for the entire global industry of Hedge Funds.”
The index represents on average many funds, some of which did much better than average. But these outlaws were not known in advance. We know that due to the success of the Eurekahedge Fund’s Fund’s index, which is “designed to provide a wide measure of the success of the basic investment managers who exclusively invest in the Hedge funds of individual managers.”
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These funding of HEDGE Funds employ analysts who carefully study the record of the HEDGE Fund’s record in the hope that they will identify those who should “become” superior performers. However, as you can see from the top chart, the Eureka Ourekahedge Fund index made only a mandatory better 2024 than the weighted Eurekahedge property index (obtaining 9.7% by 7.4%, respectively), and was still significantly lagging behind the portfolio 60/40. The chart also shows that last year was no exception. Each of the Eurekahedge index laged behind a portfolio of 60/40 during permanent five and 10-year periods.
These results come to mind the explosive conclusion that Richard Ennis, former editor of Financial Analysts Journal and co -founder of Ennisknupp, one of the first industry investment counselors, come to mind. In an article published in Investment magazine In February 2024. Ennis analyzed the impact of alternative investments or “ALTS”. This category includes all assets classes that are not supplies and bonds, such as “private capital, private market real estate, [and] Hedge funds. “
After analyzing the success of the endowment and other large institutional investors, Ennis concluded: “Alpha [the difference between a portfolio’s return and its benchmark] It seems to respond to the presence of Alta as if the latter are cryptonite – the greater the exposure, the sharper the effect on the alpha. “
Hope of the extent eternal. And for many Hedge Fund lovers, this means the promise of artificial intelligence. But that hope rests on a trembling ground.
Consider the performance of the Eurekahedge AI Hedge Fund Index, which is “designed to provide a wide measure of performance of the Hedge Funds’ basic managers who use artificial intelligence and machine learning theory in their commercial processes.” This index has done worse than its two wider brothers and the eurekahedge index sisters, producing annual yields of 1.9%, 3.5% annually and 5.5% annually for a period of one, five and 10 years.
Hedge funds are closely related to the stock and bond market than the most recognized. We know this because of the correlation coefficient of the return of the Hedge Fund and those from the 60/40 portfolio. The Correlation of the Monthly Age of EUREKAHEDGE property and portfolio of 60/40y is 74%; With the Eurekahedge Fund’s Index, the coefficient is 72%.
In presenting these sobering statistics, I do not suggest that the 60/40 portfolio will necessarily be good in the coming years. Expected yields for shares and bonds are mediocre. My point is, no matter how shares and bonds act, it is unlikely that a typical Hedge Fund or even Hedge Fund Fund will better than a portfolio 60/40.
Mark Hulbert is a regular contribution to Marketwatch. His grades Hulbert follows investment newsletters who pay a flat -rate audit fee. Can be reached
