You cannot eat Relative Performance

In the world of institutional investment management beating the performance benchmark is the holy grail. When a fund loses money it is sufficient to lose less money than peer funds. But as a private investor you cannot be that complacent. You cannot eat relative performance. So the fact that the average 'Quantitative' or 'Systematic' fund is down during the past year is no consolation/. If you were sold on the idea that they offer performance that is not correlated with the big market indices you may well wake up to the fact that there is no surefire way to escape market volatility.
What’s wrong with AQR? - ValueWalk

Long/Short Hedge Funds - did they provide what it says on tin?

The overall performance may have been disappointing with the main explanation (or excuse) the fact that QE distrorted the markets. The flood of money created a one-way street in the markets and hedge funds claim they are not geared up to be compared to long-only funds that profited from the bull market.
But one thing is forgotten in all this: while one may accept that hedge funds are not designed to compete with traditional funds the L/S funds should be able to navigate RELATIVE price moves in the markets and slowly accumulate profits while holding the market exposure broadly neutral. Careful performance analysis should shed light on the skill of the fund manager and how well they kept the portfolio in a market neutral (and therefore low risk) state.
THE LOST DECADE FOR LONG/SHORT HEDGE FUNDS

Fees on Alternatives expensive - Report

While Alternative Investments may offer good diversification they are unfortunately priced too expensively to offer a good risk/reward ratio. Performance - esp in Private Equity - may look attractive but remember that we experienced a long bull market that lifted all (asset) boats.
Complex Investments in Alternatives expensive

Saturated Managers close their Hedge Fund

One of the factors not often mentioned - when a manager has made (tens? hundred?) of millions there should be no surprise when a few of them throw in the towel and think it is not worth their while to work on behalf of investors.
How to raise money to launch a hedge fund - Business Insider

Hedge Funds - not perfect, but objective criticism please!

Claiming that Hedge Funds are expensive and offer poor performance is cheap criticism. Long-only Fund Managers are also in the firing line over poor (relative) performance and high fees. Hedge Funds 'suffer' from the fact that a long bull market makes it easy to outperform any 'hedged' fund. The real test has to be over a whole cycle - from peak to peak over one full bear and bull market. And by the way: levered 'Private' Equity Funds escape scrutiny as their performance numbers are not bandied about in the media - not to mention the often excessive compensation that the management of the companies they are invested in enjoys. So-called 'Absolute Return' Funds are now often sold on the premise that they solve the problem - neither too much hedged, but not fully exposed to market cycles - but their performance and fees are also not all that attractive.
http://www.marketwatch.com/story/hedge-fund-buyers-are-getting-soaked-2017-03-29

Hedge Funds not as bad as Warren Buffett claims

Comparing an Index (S&P 500) with Funds of Hedge Funds also compares apples and organges, though it is near impossible to invest in a Hedge Fund Index, though that would be the appropriate benchmark
Does Warren Buffett Not Understand Risk-Adjusted Returns? - Bloomberg View

High Fees? Hedge Funds not the only suspects!

Many comments are made about high fees charged by Hedge Funds. But before you jump ship you should keep in mind that Private Equity or Traditional Funds are not necessarily cheaper. The Hedge Fund concept per se does not mean that the 2+20 fee structure is set in stone. It is a choice that the providers give the investor and you are free to shop around.
But Private Equity Funds are also charging a not inconsiderable management fee and take a cut from the fund's performance. And when you invest via a Private Bank or Financial Adviser you quite often are paying a fee to them as well as a fee for the underlying investment vehicles they allocate your investment monies to.
You need to take special care and advice when awarding a management mandate to any Wealth Manager and get a clear analysis of the impact of fees on future performance!

https://www.bloomberg.com/news/videos/2017-01-04/why-asia-s-richest-families-are-dumping-hedge-funds (Bloomberg)

End of Hedge Funds?

Gloom and Doom may work for Marc Faber but it should not overshadow rational analysis of the Hedge Fund Industry.
Performance comparison with the S&P means to compare apples with oranges. And there are many different strategies that all have to be looked at from a different angle.
Costs have - and continue to be - high and it is not clear why megafunds should be able to charge fees of up to - and in extreme cases more than - 2 percent and at the same time charge performance fees of around 20 percent, often without application of any reasonable hurdle rate.
What has to - and will - happen is that the structure of traditional asset management and hedge fund management will slowly get unified.
Exceptional managers may be able to receive higher fees, but even in the traditional asset management space there is a wide variety of fee levels that investors seem to be happy to accept.
Careful scrutiny will be the order of the day when looking for 'active' managers. The trend to passive investing may continue for a while longer, it will stabilise when the passive part of assets under management reaches the 60-70 percent range. Sharp competition for the remaining 40-30 percent of the asset management cake will lead to a compression of fees.
Performance fees - not only for hedge fund managers, but also for private equity and other alternative fund structures - are problematic in any case. For good reason US regulators placed severe restrictions on their use until the mid-1980s. The way they are structured gives too much of a one way option for the providers of asset management services.
It may be the end of hedge funds as we know it (Business Insider)

Masters of the Universe or Men of Clay?

Do not get seduced by glamorous names or 'sexy' investment stories. The recent implosion of the much hyped Valeant should be a warning.

Alternative Investments for the Masses? - Treat with Extra Caution

When promoters of 'Private' Equity funds start waxing lyrical about the opportunities to invest in such vehicles that may soon be offered to the average individual investor one has to raise a word of caution. It is already difficult enough for investors to assess risk and rewards in 'traditional' asset classes such as bonds and equities. But 'alternative' assets such as Private Equity, Hedge Funds or Infrastructure Funds - while offering advantages and diversification on paper - are less transparent and usually come with higher management charges than their more mundane peers.

Hedge Fund Performance: do not compare Apples with Oranges

Comparing Hedge Fund performance with the S&P Index is comparing apples with oranges (Goldman Sachs Report). One may have a critical view of Hedge Funds – and they are far from perfect – but they are expected to provide satisfactory returns on a risk-adjusted basis and diversification away from mainstream investments such as large-cap equities that dominate the major stock indices. A less simplistic analysis is needed and in addition those looking to invest in hedge funds need to fully  understand the instrument rather than being taken in by a sales pitch.

Even arbitration no protection for investors

This case demonstrates that investors should not rely on securities arbitration for his protection as providers of financial services use every legal option to delay or void such an award. The reader can form his own judgement about the morality of such conduct.

Minneapolis Doctor is defrauded in $7 Million Scam

Just another example illustrating that due diligence is essential when selecting a money manager. Full Story here (StarTribune)

Why is your Financial Adviser offering 'Alternatives'?

When being offered any financial product investors should always make sure that they really understand them and are not swayed by the sales pitch they get from a financial adviser. While the inherent risks in any product should be the main consideration there is also a need to have a good look at any fees associated with the product.

Azentus Fund loses 6.70 % in first year

But assets under management are up. Need we say more? Nothing illustrates the need for careful fund selection more - and this applies to all investment funds, traditional, hedge or private equity.

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.

Who is fighting your corner and watching out for possible fraud

A case brought against a prominent investment firm illustrates that investors need expert advice when faced with sophisticated money managers that may well have an information advantage and better knowledge of the investment products.

Hedge Fund-lite UCITS Fund Warning

The bureaucrats trying to protect the investing public from costly failures in the fund management industry may have good intentions but the outcome of their deliberations more often than not adds additional complexity to the rules governing the investment industry. When seasoned industry figures warn of potential blow-ups of certain types of UCITS-III complaint 'hedge fund-lite' vehicles the investment public - whether it is ordinary investors or 'sophisticated' investors - should wake up to the fact that it would do well to consult unbiased advisers before committing their funds to any investment product.

How to make money from Hedge Funds

This brief article will pour cold water over the shoulders of any investor who hands money to hedge funds charging a '2+20' percent fee without doing extensive due diligence. Maybe the numbers are not mathematically precise but the general drift of the conclusion in the article should be evident: Otherwise an investor would be better off to manage and/or sell a hedge fund or provide them with accomodation in Greenwich/Ct (or London's West End). One should not forget that 2+20 is not the only cost many investors (certainly most private investors) face as there will be additional fees for those in private banking departments or fund of fund managers helping to select the (hopefully) winning funds.

Hedge Fund - no longer an elite business

Says Michael Steinhardt - and he should know. Investors must analyse hedge fund offerings more carefully than ever given the thousands of funds that are on the market now.