With tighter regulations on the horizon, less-than-stellar 2011 returns, calls to end the treatment of hedge fund profits as capital gains, uncertain markets, the European debt crisis and more, it isn’t easy good news in the hedge fund job sector these days.
But hey, you can get enough gloom-and-doom from other sources. It’s our job to bring you a few bright spots, and there are some.
From the Connecticut Post comes word that wealthiest endowments are using hedge funds to outperform their smaller cousins by a sizeable 2.5 percent.
Achieving this alpha is mostly a result of a commitment to due diligence, according to the Greenwich Roundtable, an investor group that published the research. Naturally the larger endowment funds and wealthier family offices have the money available to hire specialists who understand the complexities of hedge funds, and can pick winning managers.
University endowments with $1 billion or more earned an average of 5.8 percent on their alternative investments over 10 years. While endowments with $25 to $50 million had to settle for an average return of 3.3 percent.
Then there’s good news on a story we’ve reported on before. The new website BlueChipCareer.com continues to offer mentoring and job interview guidance from experienced veterans in the industry to those seeking a hedge fund job (and other financial positions). They are getting the word out just before the holidays for those looking to ramp up their job search in 2012.
“I wish I had a resource like Blue Chip Career earlier in my career,” said one of the mentors, Charlie Trisiripisal, a Partner at a New York hedge fund, which he co-founded. “Talking to someone with life experience is 10 times better than what a book will teach you about the interview process or breaking into a specific industry.”
And finally, the folks at JP Morgan suggest that despite the headlines, hedge funds get their equity bets right more often than wrong. Nikolaos Panigirtzoglou and Matthew Lehmann, in the global asset allocation and alternative investments group at JP Morgan, tested the performance of three hedge fund position indicators to gauge the success rate of their market calls.
The three indicators were debit balances in margin accounts at New York Stock Exchange (NYSE) member companies; rolling 21-day beta of macro hedge fund returns to the S&P 500; and aggregate net speculative positions in ‘risky’ assets relative to ‘safe’ assets derived from Commodity Futures Trading Commission (CFTC) data.
Based on the data, hedge funds get their positioning right more often than wrong, and that it is more profitable overall to follow hedge funds, rather than go against them. You can see a more detailed explanation of their analysis in a Hedge Funds Review post.
How about you? Are you overwhelmed by the negativity gripping the industry right now? Or seeing some bright spots on the horizon? Add your comments below.