Despite conviction that hedge funds are justified in their underperformance compared to market benchmarks due to their supposed insulation from volatility through a combination of long and short bets, the industry took a painful hit during this week's market crash. William A. Ackman, CEO of Pershing Square Capital Management and one of Wall Street's successful investors, revealed to his investors on Wednesday that the firm has lost all of its gains for the year. Bridgewater Associates, the largest hedge fund in the world in terms of assets under management, was down 4.7 percent for the month on its Pure Alpha fund. The Pure Alpha fund had previously been up 11.8 percent for the year.
Experts uniformly point to worries about China's slowdown and the looming rise of interest rates by the Federal Reserve, but are divided in their outlook about the market. China's economy has been the source of worry since June, when its market plunged and required regulator intervention. Similarly, as China's stock market plunged this week, regulations stepped in to make borrowing and investing more appealing by cutting interest rates and allowing municipal pension funds to be invested in the stock market. However, these measures did not prove drastic enough to abate fears of a "Black Monday" in both China and the United States, which prompted further selling. Fears about an increase in t...
Despite conviction that hedge funds are justified in their underperformance compared to market benchmarks due to their supposed insulation from volatility through a combination of long and short bets, the industry took a painful hit during this week's market crash. William A. Ackman, CEO of Pershing Square Capital Management and one of Wall Street's successful investors, revealed to his investors on Wednesday that the firm has lost all of its gains for the year. Bridgewater Associates, the largest hedge fund in the world in terms of assets under management, was down 4.7 percent for the month on its Pure Alpha fund. The Pure Alpha fund had previously been up 11.8 percent for the year.
Experts uniformly point to worries about China's slowdown and the looming rise of interest rates by the Federal Reserve, but are divided in their outlook about the market. China's economy has been the source of worry since June, when its market plunged and required regulator intervention. Similarly, as China's stock market plunged this week, regulations stepped in to make borrowing and investing more appealing by cutting interest rates and allowing municipal pension funds to be invested in the stock market. However, these measures did not prove drastic enough to abate fears of a "Black Monday" in both China and the United States, which prompted further selling. Fears about an increase in t...