September 15, 2016
Managing Member at Villicus Capital Group LLC
Hedge Fund Industry Growth ‘Unwelcome,’ Says Caxton’s Law
Andrew Law,CEO of Caxton Associates states that the Hedge Fund industry has grown too large to deliver out-sized returns.In addition, in his letter,Law says that hedge funds weren't created for managers to "live well" on fees. Interesting because,even though Caxton is reducing its fees, they are still charging between a 2.2 to 2.5% management fee, as well as a performance fee of 27.5% of profits! As to performance,Caxton was down 2.6% through Sept. 2,up 3.5% in 2015, and down 1.4% in 2014,according to Bloomberg. It's no wonder that many hedge fund investors have been withdrawing capital and reallocating it to a less expensive option. As to the initial statement about returns, I have to respectfully disagree with Mr. Law. A hedge fund's return is going to be contingent on his methodology. Certainly, size does matter, but a scalable strategy should still be able to generate significant returns. The problem is that hedge funds have been operating more like mutual funds in recent years. Many have crowded into the same trades,have maintain large long positions with no hedging, or are trading asset classes that have been trendless with low volatility. Investors expect more from them,and rightly so with the high fees they are paying.
Read more Here: http://hvst.co/2cJxDFQ
Read more Here: http://hvst.co/2cJxDFQ
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