Hedge Funds’ Outlook for 2016

January 14, 2016 James Heinsman Economic Barometer

bank2015 was a challenging year for hedge funds. 2016 is also looking uncertain. One example of this was the recent drop by 6% of the S&P 500, making it “one of the worst weeks on record for the U.S. stock market.”

However, in China things have been looking quite different for hedge funds. According to Klaus Wille, in a Bloomberg article entitled, ‘Winners in 2015,’ “China-focused managers betting on rising and falling stocks returned 11 percent in 2015.” As well, according to Greenwoods Hong Kong-based partner, Joseph Zeng, “The $2 billion Greenwoods Golden China Fund returned 22 percent for 2015, with the fund making more money in the first half.” Plus, SPQ Asia Capital Ltd. enjoyed a “more than 30 percent estimated gain” last year.

In a seemingly counter article that appeared in ValueWalk, it was reported that “overall for 2015, hedge funds were up 1.56% (their lowest annual return on record since 2011) amidst a challenging market environment in 2015.” But in the same journal in a different article, staff wrote: “funds copying hedge-fund strategies to make money are on track to record their best ever net inflows this year as investors look for ways to escape volatile markets. These funds, known in the asset management industry as liquid alternatives, charge lower fees than hedge funds, allow investors to take out money on a daily or weekly basis, and provide better transparency on how exactly they make money. As a result, both retail investors and institutions have poured money in the funds, especially in Europe, helping them grow faster than the hedge-fund industry.”

So with all of these conflicting perceptions and statistics, the question is, is now a good time to invest in hedge funds?   According to Andrew Osterland, in an article in CNBC, very possibly yes. He ascertained that: “Money spent on the high fees that come with investing in hedge funds might seem to have been a waste over the last six years, considering the performance of traditional assets. But with the bull market in stocks now very long in the tooth and interest rates at historic lows, hedge funds are looking like an attractive alternative to investors worried about their portfolios.”

Seems like it’s time to take the bad news with a pinch of salt.

Andrew Osterland, CNBC, Joseph Zeng, Laus Wille, ValueWalk,

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