Green Shoots In The Hedge Fund Industry

For financial journalists, there has been an easy formula for writing an article about hedge funds in the last few years. Draw a graph of an aggregated hedge fund index against the S&P 500 over the last decade or so, and point out the gap. Note the overall industry outflows in the last couple of years. Add a paragraph about how investors are resentful of management and performance fees. Find a large institutional investor, a Calpers or a Nycers, for example, who has made a highprofile decision to downsize its hedge fund portfolio. Finally, you'll need a picture: a yacht, a stressed-looking trader, Warren Buffett smiling.

As with all of the best clichés, there is some basis in fact for each of these points. However, recent data and commentary have provided clear signs of 'green shoots' for the industry. So in the spirit of spring, at least for those of us in the northern hemisphere, we will explore them in this article.