One of the problems with hedge funds is that they are changing so rapidly. If you have the balance sheet that closed business last night, by 11 A.M. this morning, that won't tell you very much about what they're doing.
Sentiment: NEGATIVE
Despite all the media coverage, glitz and glam of hedge funds, they have not done well for their investors. They have high - some say excessively high - fees; their short- and long-term performance has been poor.
The 1969 experience has been a rude awakening for many hedge-fund investors and has left some of them with strong reservations about the whole concept. For the first time in their relatively short history, the funds are not growing: in fact, some have suffered large withdrawals of capital, and a few have actually folded.
In 2008, people who invested in hedge funds needed capital badly, but many of the funds would not return their money. However, I gave money back to any investor who requested it. It was the bottom of the market and a pretty tough time.
Overwinding happens when hedge funds destroy companies by attempting to leverage derivatives against otherwise productive long-term assets.
Given the typical fee structures of hedge funds, they need to do something different to make money in a consistent way.
Hedge funds, private equity and venture capital funds have played an important role in providing liquidity to our financial system and improving the efficiency of capital markets. But as their role has grown, so have the risks they pose.
Successful hedge funds will be entrepreneurial; it is the essence of the craft.
Hedge-fund managers make too much money relative to their social utility. I wish their rewards were a bit closer to those of, say, schoolteachers.
Improving oversight of hedge funds and other private funds is vital to their sustainability and to our economy's stability.
Hedge funds are not especially liquid. Many are 'gated' - meaning there are only small windows when you can withdraw your money. They typically have a high minimum investment and often require investors keep their money in the fund for at least one year.