Forgive the not-so-original post title, but I thought I would share an interesting article written by the Tom Taulli of the Motley Fool. The article describes Goldman's ailing hedge fund business, specifically commenting on the fund's two year decline of over 12% and the inability for the fund to secure any new investments. Goldman has sustained the credibility of being one of the finest banking powers, but its asset management business appears to be losing its luster. I would not be surprised if Goldman acquires a more successful private fund to complete with Merrill's 2005 BlackRock acquisition.
These stories about hedge funds fascinate me because they often use zero sum trading instruments. Many times these funds are simply taking strategic "bets" and it appears that Goldman may have been on the losing end of the bet. The more these funds drive away from equities, the more volatile the returns will be. The fund that I am running is attempting to stabilize returns in any market environment by utilizing equities and fixed income. I thought that's what a hedge fund is supposed to do, provide stable returns in any market environment.
These stories about hedge funds fascinate me because they often use zero sum trading instruments. Many times these funds are simply taking strategic "bets" and it appears that Goldman may have been on the losing end of the bet. The more these funds drive away from equities, the more volatile the returns will be. The fund that I am running is attempting to stabilize returns in any market environment by utilizing equities and fixed income. I thought that's what a hedge fund is supposed to do, provide stable returns in any market environment.
1 comment:
It appears that Bear Stearns is having similar problems: http://money.cnn.com/2007/06/25/
markets/bc.bearstearns.hedgefund.
reut/index.htm?section=money_
topstories
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