Why Hedge Funds Will Not Fail
Despite fee pressures, inability to consistently produce high alpha, and a lack of long term capital well-aligned with investment strategies, I believe hedge funds will overcome these challenges and succeed.
Why am I optimistic when other experts say otherwise?
There are three primary reasons:
A macro view of the asset management industry reveals that there are few other investments providing investors with long-term, above-market returns.
The talent running hedge funds comprises the most agile, innovative, and sophisticated risk-takers, capable of navigating changing market conditions successfully over a longer timeframe.
There is better financial alignment than other investment models; the managers typically have significant skin in the game so they are “eating their own dog food”.
...Despite the longevity of hedge fund success, not all will remain the same. The best hedge funds will need to tackle the following to be successful:
