WANT MORE PROOF THAT THEY’RE LYING TO YOU?
Bloomberg started off the year 2025 touting the performance of the “Smartest, Bestest, Richest” funds in the world ….
……….which FANS THE FLAMES of the Fear Of Missing Out investors …. who are searching for solutions ….
As written in Bloomberg By Nishant Kumar and Katherine Burton
January 2, 2025 at 11:44 AM EST
Multistrategy Hedge Funds Delivered Again in 2024
Millennium rose 15%, its best performance since 2020
ExodusPoint climbed 11.3%, second-best returns since inception
Multistrategy funds of all sizes produced mostly double-digit gains in 2024, in what was generally an upbeat year for the hedge fund industry.
Millennium Management jumped 15%, the best return for Izzy Englander’s multistrat giant since 2020, according to a person familiar with the matter,
That performance was neck and neck with Ken Griffin’s Citadel, which returned 15.1%, just 10 basis points higher than its largest rival.
In 2022, Citadel’s returns outpaced Millennium’s by almost 26 percentage points.
D.E. Shaw’s flagship Composite hedge fund gained 18%, while Oculus, the firm’s second-biggest fund that mostly makes macro wagers, soared 36%..
Michael Gelband’s ExodusPoint Capital Management returned 11.3% last year, its best result since 2020, when it gained 13.5%.
Balyasny Asset Management and Schonfeld Strategic Advisors both rebounded last year, people familiar with the matter said. Schonfeld’s funds returned about 20% each, while Balyasny gained 13.6% in its Atlas Enhanced Fund — compared to returns of less than 5% each in 2023.
Yet they DON”T say what the S&P500 Index did last year == 23.31%.
THEY ALSO FAIL TO POINT OUT A VERY INTERESTING ISSUE REGARDING HEDGE FUNDS …..
In a paper titled “THE PERFORMANCE OF HEDGE FUND PERFORMANCE FEES”
Itzhak Ben-David, Justin Birru, Andrea Rossi Working Paper 27454 http://www.nber.org/papers/w27454
NATIONAL BUREAU OF ECONOMIC RESEARCH
1050 Massachusetts Avenue Cambridge, MA 02138 June 2020
The conclusion of the paper is …..
“The historical analysis of a large sample of hedge funds reveals that the impact of the asymmetry is significant.
The estimates show that investors have paid 49.6% of aggregate gross profits as incentive fees, that is, the effective incentive fee rate has been more than twice as large as the average nominal incentive fee rate of 19.0%.
We show that the difference in fees, the “residual incentive fees,” were paid to managers irrespective of their lifetime performance.
Our results are surprising in light of the sophistication of hedge fund investors.
In the U.S., only institutional investors and accredited investors can allocate capital to hedge funds.
The results about the nature of incentive fees that we document are not entirely driven by a single unexpected shock. Yet, investors are slow to recognize these facts.
Despite the long history of poor outcomes associated with the prevailing compensation contract, the hedge fund industry does not appear to be moving toward a more symmetrical incentive structure.”
SO ….BLOOMBERG WRITES A STORY
MARVELING AT THE RETURNS OF MANY HEDGE FUNDS.
1) THEY KNOW THAT THOSE POSTED RETURNS ARE NOT IMPRESSIVE RELATIVE TO A SIMPLE INDEX FUND.
2) THEY KNOW THAT THE PERFORMANCE NUMBERS —- DO NOT SHOW NET PERFORMACE (AFTER FEES AND TAXES)
BOTH OF WHICH HAVE ENORMOUS AFFECT ON PORTFOLIO REAL PORTFOLIO RETURN
3) THEY DON’T MENTION THE PAPER, WRITTEN FOUR YEARS AGO, WHICH EXPLAINS HOW SUCH FUNDS
WORK PRIMARILY FOR THEIR OWNERS AND OPERATORS,