10 April 2006

Do Alternative investments give Alternative Outcomes?

In the past seven years, the performance of the average hedge fund has been remarkably correlated with the S&P500.  In fact, the best S&P years correspond almost perfectly to the best hedge fund years.  While this says nothing about the capabilities of any particular manager, it does suggest most hedge funds are highly dependant on  healthy stock markets for good returns.  The implication being that alternative investment approaches, like hedge funds, do not necessarily yield alternative performance.

Our article, Effective Hedge Fund Investing, discusses this subject in more depth.