NY Mag – Imagine: You’re a baseball player. You have the highest salary on your team, but your batting average is below .200, and you’ve struck out swinging in 90 of your last 100 at-bats. And yet, day in and day out, your coach refuses to bench you. In fact, he says, he’s planning to give you a better contract next year.
This is roughly where hedge funds find themselves, in the grand scheme of Wall Street. Most funds are struggling to earn their hefty fees, and their turbo-charged, exotic trading strategies are doing much worse than basic stock indexes. New regulations have forced funds to be more transparent (an annoyance for an industry that has always prided itself on secrecy), and a years-long insider trading investigation of several prominent fund managers has put the entire industry on edge.