With the very largest and most experienced of hedge fund managers vociferously commenting on the "Truman Show" mirage of the markets [2], the danger of currently policies (there is no way to tell exactly how it all will end. Badly, we guess [3]), and the need for stock-picking prowess, we thought the following chart might highlight the dawning of the death of an entire substrata of so-called hedge-fund managers (and not just the $0 AUM newsletter publishers) who appear unable to "stockpick" their way out of a Fed-provided paper bag. Since Q4 2010, Long/Short funds are down 6% while the immutable low-cost levered wealth creation policy vehicle of choice for the Fed (the S&P 500) is up almost 50% (dividends aside).
There's "hedged" funds and then there's this...
[4]
Which is not surprising given what we previously noted...
Hedge fund managers have become high cost version of their index-tracking ETF brethren...
[5]
And performance advantages have dwindled...
[6]
as style tilts (growth vs value for instance) have seen increasing correlations...
[7]