Poor Hedge Fund Returns: “Concentration” May Be The Solution – Goldman

Hedge funds are being shown in a relatively poor light considering their unimpressive returns this year when juxtaposed against those of the S&P500.

The latest ‘Hedge Fund Trend Monitor’ study from Amanda Sneider, David J. Kostin, Stuart Kaiser, Ben Snider, Rima Reddy and Aaron Woodside of Goldman Sachs Portfolio Research puts this in rather stark perspective:

- The typical hedge fund generated a 2013 YTD return of 6% through October 31, compared to 25% gains for both the S&P 500 and the average large-cap core mutual fund (see Exhibit 1).

- At mid-year 2013 the average hedge fund had returned 4%, suggesting second-half gains of 2% while the S&P 500 rose nearly 5%.

- The distribution of YTD performance suggests...