ANOTHER year, and another mediocre performance by hedge funds, to put it kindly. The Barclay Hedge Fund Index gained a meagre 2.89 per cent in 2014, while the Standard & Poor's 500 index gained over 13 per cent and the Barclays United States Aggregate Bond Index rose over 5 per cent.
Even as their high fees have minted scores of new billionaires, hedge funds have now substantially underperformed a simple blend of index funds - 60 per cent stocks and 40 per cent bonds - for three-, five- and 10-year periods. And the 10-year numbers cover the period of the financial crisis and the sharp decline in stocks - the very calamity that hedge funds are supposed to protect against.
No wonder Calpers, the...
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