Barclays Prime Brokerage: Over Past 4.5 Years Hedge Funds Generated Negative Cumulative Alpha

The news for run-of-the-mill hedge funds in a Barclays prime brokerage piece is not entirely positive. The study of 340 hedge fund investors with over $8 trillion in assets noted general dissatisfaction over recent performance. The study highlighted that for the last 4.5 years hedge funds generated negative cumulative alpha which topped in May 2011. Amid losing hedge funds, where allocators expect to pull investments, there are also winners – pointing to an interesting if yet unidentified major trend in investing. But notes liquidations are coming stating:

We expect HF liquidations in 2016 to rise to 12% from a recent historical average of 10%, given the performance challenges of 2015 and early 2016.

Additionally, if 2016 HF performance continues at, or falls below, the annualised 1Q16 / 2H15 levels, the industry may face a reduction in AUM as net new flows are unlikely to be additive.

Also see Hedge Fund Alpha Drops 1700 Basis Points in 11 Years

For the hedge fund industry, size does matter and bigger isn't always better
The Barclays study of institutional investors who represent nearly $7.7 trillion in assets under advisement was pointed in several regards, addressing industry challenges but also pointing to opportunity.

The report addressed the topic of “how big is too big,” pointing to a diminishing return potential once a hedge fund gathers too much in assets. The report shed light on how institutional investors are increasingly viewing their hedge fund allocations from a new perspective.

The study, which included 73 hedge funds of funds, 66 family offices, 39 endowments and foundations, 38 investment consultants, 37 “other investors,” 30 public pension plans, 26 private pension plans, 18 private banks and 13 insurance companies, found that half of those surveyed believed hedge fund investments did not meet their expectations over the last few years.

[swpm_payment_button id=2022964]



This content is exclusively for paying members. Access all of our content on including years of timeless investment news and in depth analysis for only a few dollars a month by signing up here while also supporting quality content and journalism, or learn more about our premium content here

If you are subscribed and having an account error please clear cache and then cookies if that does not work email and we will get back to you as quick as humanly possible

Saved Articles

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted for being a sophisticated and loyal reader.

Welcome in the new year by signing up up for ValueWalkPremium today and get our exclusive content for 40% off. This is our second biggest discount ever!!

Use coupon code VIP20 or click on the button below

Limited time offer only ENDS 1/31/2019 or after next 30 23 subscribers take advantage whichever comes first – please do not share this discount with others