18 January 2012

Hedge Funds had difficult 2011

One of the problems when investing in hedge funds is the asymmetric risk-reward profile that an investor faces. The fate of Eton Park Capital Management illustrates this. While there may be a high-water mark that gives some comfort to the investor who is faced with a loss of 11 pct during the last year, the investment manager is not required to return the performance fee that was charged to the fund during any previous year when the fund made a profit.