Business Insider – Hedge funds continued to underperform the overall US equity market this year. In the first six months of 2013, the S&P500 index is ahead of the CS Hedge Fund Index by over 10%.
That is not entirely unexpected during a bull market however – as was the case in the 90s. Just holding short positions – whether in long-short strategies or as risk-reducing positions – should result in underperformance. The fact that the hedge fund universe includes credit, fixed income, and other non-equity strategies makes it difficult for a broad group of hedge funds to outperform in a bull market. Here is what the CS Hedge Fund Index breakdown by “sector” looked like over time.