Anyone following the primaries will recognize this phrase, used frequently in the context of Donald Trump’s foray into presidential politics. For example, in the recent South Carolina contest, the phrase was employed ubiquitously by talking heads in the mainstream media, who were largely incredulous regarding the margin of Trump’s victory in the wake of his dust-up with Pope Francis and his stinging remarks about former President George W. Bush. Conventional wisdom suggested that Trump’s remarks would have negative repercussions with voters and diminish his chances for victory in the primary.
What Does This Have to Do With Hedge Funds?
The mainstream media misunderstands voters in the same way it misunderstands investors and therein lays the parallel. Hedge fund performance has been the subject of widespread media criticism and hedge fund fee structures are often mischaracterized as everything from despicable to shameful, yet hedge fund assets under management continue to climb.
Hedge fund performance has been disappointing and many wince at 2015’s results in the same way many wince at some of “the Donald’s” remarks. However, hedge funds appear to defy financial gravity in much the same way Trump has defied political gravity, as both continue to enjoy widespread support.
Those Contemplating a Hedge Fund Career
Despite the negative press, one cannot lose sight of the fact that hedge funds have proven to be a worthy investment for several decades. While this is not, in itself, sufficient to justify continued interest in a hedge fund career, it is noteworthy. Even more persuasive are the success stories that abound in the industry. For example, Conquest Macro Fund LTD has gains of 21.7 percent through February 16, 2016, Horseman Global Fund is up 15.53 percent as of February 10th, Brevan Howard Systematic Trading Fund boasts gains of 12.09 percent through February 12th and AAM Absolute Return Fund reported gains of 11.02 percent through February 12th. Incidentally, AAM Absolute Return Fund returned more than 58 percent in 2015, an astounding result by any measure, earning the fund honors for top performance among hedge funds. This list is by no means inclusive and other examples of stellar performance can be found here.
Just as Jeb Bush and Hillary Clinton were presumed by the pundits to be the standard bearers of their respective parties for the 2016 presidential election, the greatest names in hedge funds were tarnished in the crucible that was 2015. Examples include Larry Robbins’ Glenview Capital Partners which lost more than 18 percent and Bill Ackman’s Pershing Square International which fell 16.5 percent.
The Take-Away
Media pundits are not the best source of advice as to whom one should vote for or with whom to invest. More to the point, pundits are certainly not career counselors. In short, don’t allow yourself to be discouraged with regard to a career as a hedge fund professional by the talking heads. For trusted insights regarding a hedge fund career, consider utilizing the information supplied by the 2016 Hedge Fund Compensation Report, which does an outstanding job of lifting the veil of secrecy that conceals the intricacies of hedge fund pay practices and more.
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