Tuesday, February 06, 2007

This just in!

NEW YORK (HedgeWorld.com)—Hedge fund correlation to the Standard & Poor's 500 stock index has reduced significantly since June last year, according to the latest edition of Hedge Fund Monitor, a weekly report produced by Merrill Lynch.



Thanks Mama Merrill! If by "reduced correlation" you mean "underperformance", I'm right with ya. I too should put together an "uncorrelated" fund so as to offer my investors diversification benefits.

Now. I know that no investment type or asset class should be expected to outperform indices all the time, and I don't even think hedge funds' aggregate performance in 2006 should count against them, although only regulators should be thinking about them in the aggregate. Hopefully, the less than stellar year will dial back the hysteria around them and increase the level of scrutiny investors apply to them.

But it's just a stupid and lazy argument to claim a non-correlation benefit from underperformance.

2 comments:

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