MFOHome About Commentary Discussions Funds The Best Resources Support Us!

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Sign In Register

Categories

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

A Hedge Fund Illusion

MJG
edited January 2012 in Fund Discussions
Hi Guys,

Perhaps you regret not having the heavy entry fee to buy into a pure Hedge Fund. According to a recent book by Simon Lack, “The Hedge Fund Mirage”, that regret would be wasted emotion.

His primary finding is “"If all the money that's ever been invested in hedge funds had been put in Treasury bills instead, the results would have been twice as good.”

That’s a shocking conclusion. Apparently, Hedge Fund returns are an illusion; they have been grossly exaggerated.

I have not read the book; I simply accessed a review published in today’s WSJ. The review was written by George Melloan. Here is the Link I used to gain that access.

http://online.wsj.com/article/SB10001424052970204791104577110650751578814.html?link=SM_inv_sr_res

Enjoy the article, and be relieved that your mutual fund portfolio more than adequately substitutes for an inflated Hedge Fund operation.

Best Regards.

Comments

  • scott
    edited January 2012
    "Perhaps you regret not having the heavy entry fee to buy into a pure Hedge Fund."

    There are feeder funds in the London market (as well as all manner of alternative/private investments), as well as roundabout methods (Greenlight RE being a main example, and both Third Point and SAC are in the midst of doing similar vehicles) in the US. There are other roundabout ways to invest with terrific investors, including Fairfax Financial Holdings (FRFHF.PK) Icahn Enterprises (IEP) is another one - that hasn't done well lately, but some may regard that as an opportunity.

    There is also a rather bizarre closed-end fund (FOFI.PK) that invests in hedge funds (apparently managed by Wellington.)

    There was some discussion that Bill Ackman would do a listed hedge fund last year, but it remains to be seen where that would list and if it would ever come to market.

    Hedge funds are not foolproof either, as returns last year showed. However, I do think there are outstanding managers who do have a greater degree of flexibility than the great majority of mutual funds.

    While certainly not a pure hedge fund, Marketfield (MFLDX) is about as close as I've seen, and a unique fund I recommend.

    Nothing is foolproof or certain in investing - moreso now than ever. However, I do like having investors who have a significant degree of flexibility and a wider array of tools to approach today's markets.
  • VintageFreakVintageFreak
    Thanks for the endorsement. I started with MFLDX as alternative to my NARFX - which has since become SARIX and left me wondering WTF I should do with it.

Sign In or Register to comment.