So the Barclay Group, which monitors hedge funds states that hedge fund investments gained 1.01 percent in August while the stock market fell 1.5 percent. While the 1.5 percent drop is before fees, there is no information regarding the net return of the hedge funds. Considering the high fees involved, the real returns may be comparable.
While we’re on the topic of Hedge Funds, the New York Times has a nice story about the former C.E.O. of UBS’s investment bank who quietly stepped down to manage a huge new hedge fund.
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The hedge fund return after fees would be roughly 0.63%. Most hedges take 20% of
the profits with an upfront fee (2%/year is common). 1% less 20% (performance) less
0.17% (maintenance). The trick to a hedge fund is that they are not supposed to
have very many bad months or they do not survive long.
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