Fund of Funds

Largest US Pension Fund Suffers Worst Annual Return Since Financial Crisis Due To Heavy Stock Losses

While we have often documented the dramatic underperformance by the hedge fund industry over the past decade, today we learn that "vanilla" asset managers were also hurt over the past year in which the S&P went nowhere. Case in point: Calpers, the largest U.S. public pension fund which as the WSJ reports posted its lowest annual gain since the last financial crisis due to heavy losses in stocks.

Ron Insana: "I Only Manage A Virtual Portfolio Which I Took To Cash Last Thursday"

Once upon a time, Ron Insana tried running a fund of funds. He failed. Then he tried working at SAC. That didn't work out either. Then, he decided to write scathing opeds in the Huffpo bashing "doomsayers." Four years later, the Fed is terrified to hike rates by 25 bps from zero while in the meantime all other central banks have joined the Fed in a global, liquidity-injecting tsunami, confirming the doomsayers were right all along. So what is ole Ron, who once upon a time used to work at CNBC up to these days? Why "managing a virtual portfolio" it would appear... which he "took to cash last Thursday."

90% Of Hedge Fund Managers Are Overpaid Relative To "True Talent"

With plunging dispersion (across stocks returns) and soaring beta to the market, it appears an increasing number of hedge fund investors believe the masters of the universe aren't worth the money. As Bloomberg reports, nine out of 10 hedge-fund managers are overpaid as management fees don't reflect declining interest rates and fund returns, according to Unigestion Holding SA, which invests $2 billion in hedge funds. With The Fed at their back, it is hardly surprising that one fund of funds manager blasts, "the philosophy of the hedge-fund industry, as it should be, is to remunerate true talent; fund managers should be remunerated when they perform. They should not be remunerated for doing nothing."

EconMatters's picture

This is a Trader`s Market

Once Central Banks get out of markets, and I know some critics think that once they get in they are here to stay, healthy volatility and actual price discovery should come back to asset classes. 

Leaked Documents Show How Blackstone Fleeces Taxpayers Via Public Pension Funds

The following story by David Sirota at PandoDaily is simply excellent. It zeros in on the secretive and rapidly expanding relationship between private equity firms and the public pensions that invest in them. It shows a crony capitalist love affair greased by lobbyist influence peddlers known as “placement agents”, as well as non-public agreements between PE firms and public pensions chock full of conflicts of interest, extremely high fees and underperformance. Unbelievably, in many instances the trustees of the public pensions are not allowed to know what funds the “fund of funds” invest in. This makes due diligence impossible, and in one particularly egregious example it led the Kentucky Retirement Systems to unknowingly invest in SAC Capital despite the fact it was under SEC investigation at the time.The chief villain in this article will be no stranger to readers of this site. It is Blackstone...

Forbes Reveals Its "Top 30 Under 30" In Finance

With Trader Monthly magazine having, ironically, gone out business long ago, all those traders whose egos demanded that their insider trading connections put them at least in one of the iconic "Top X under X" league tables, pardon, rankings, had to bide their time in expectation of one day when their prowess to frontrun others or move markets with repeated calls to 555-7617 (with or without references to Anacott Steel) would be appreciated by such sterling Wall Street "experts" as Anthony Scaramucci. Well, for this year's crop of some 30 traders under 30, the day has arrived. And while Forbes may not be Trader Monthly, the amusement, the hubris and the behind the scenes dealing to appear in such a list, sure are still the same...

Fund Of Funds Implosion Forces Conversion Of Ever More Hedge Funds Into "Long-Onlies"

In a world in which the Chief Risk Officer of the formerly free capital markets, Ben Bernanke, has made any downside hedges obsolete (and as a result hedge funds have posted 5 years of returns without outperforming the S&P500), the first casualty has emerged: fund of funds. These parasitic, fee-soaking institutions, which merely collect a fee on top of the fees already charged by hedge funds, are rapidly on their way to extinction as the following charts from Eurekahedge prove conclusively. Naturally, the FOF industry which generates massive fees for its "value adding" managers, will not go down without a fight. And as Pensions and Investment reports, the FOFs have found a way to strike back: convert hedge funds into long only, idiot money, and we do enjoy the irony that in this centrally-planned market the idiot money is outperforming the smart, nimble asset managers by orders of magnitude.