Even as their high fees have minted scores of new billionaires, hedge funds have now substantially underperformed a simple blend of index funds — 60 percent stocks and 40 percent bonds — for three-, five- and 10-year periods. And the 10-year numbers cover the period of the financial crisis and the sharp decline in stocks — the very calamity that hedge funds are supposed to protect against.
No wonder Calpers, the giant California retirement system, withdrew from hedge funds last year. I assumed that by now, many other big pension funds and institutions would be following its lead.
On the contrary. Read Full Article »
