Wall Street Journal- The past decade has been the era of the hedge fund, as investors snapped them up for their track record of beating the market with often highly complex trades.
But now, as the credit crunch upends financial markets, that very complexity is coming back to bite some of them.
In the past year, shares of Fortress Investment Group LLC — which became the symbol of hedge-fund success when it went public last February — are down 50% as investors wring their hands about the value of its real-estate, debt and other holdings. A Fortress official declined to comment.
A pair of $2 billion funds run by AQR Capital Management Inc. are down about 15% this year. And yesterday Citigroup announced a bailout of an in-house hedge-fund group clobbered in part by bad bets on highly complex mortgage-related securities.
