The average saver, in fact, hates the "hedge funds" (or hedge funds, in Italian), considering them, wrongly or rightly (often wrongly) one of the causes of today's evils. In fact, as of 2008, all medium have pointed to these tools as the main cause of the crisis and, by dint of hearing it again and again, everyone has associated the word hedge fund with something negative, insecure and of a fraudulent nature. This bad reputation that surrounds them, however, is only one of the causes that have led hedge funds to not have a good time these days.
The problem of progressive abandonment of this investment tool by savers (many of which have invested or are investing in hedge funds without even knowing it, through mutual funds, asset management companies or SICAVs they have purchased, which in turn invest small shares of hedge funds) depends above all on the high commissions, from complex legal structures, From little transparencyand at our numerous obstacles to divestment and last, but not least, from performance often not exciting as an industry as a whole.
The graph (source: Bianco Research) shows the recent performance of a broad category of hedge funds, probably the flagship of the sector, the so-called "long-short” (blue line), and compares them with the dynamics of the most important stock market in the world: the US one (red line). These speculative funds, which generally invest in stocks (often American, to take advantage of market liquidity), should remain neutral vis-à-vis financial markets, that is, to grow continuously, constantly and regularly, ignoring the volatile motion of the markets. L'the goal is to produce the magical Alpha: to generate positive performance regardless of market trends. However, as we can see from the graph, the hedge funds in question have had significantly worse performances than the market: therefore this Alfa is negative.
Advise Only has already written on theelusiveness of the Alpha of management: “The highlanders of the financial markets” and “Alpha of management, Castelmagno and Etf“. Those considerations remain very current.
