So far this year, hedge fund managers have failed to beat the S&P 500, one of the cheapest and most accessible investment vehicles for the average investor. After falling 0.2% in June, hedge funds returned just 5% in the first half of the year, with event-driven strategies lagging the most, according to data firm HFR. In contrast, the S&P 500 rose 15% in June this year, one of the best-performing indexes in the first half of the year. “As the first half of 2024 comes to a close, hedge funds continue to post mid-to-high single-digit gains across most strategies,” a Morgan Stanley team that includes Bill Meaney wrote in a note to clients on July 1. “The last six to eight weeks have been more challenging from an Alpha perspective. Morgan Stanley said Americas long-short hedge funds were up just 40 basis points in June, meaning they gained just 10% of the upside relative to the benchmark S&P 500. One basis point is equal to one hundredth (0.01 %). Because hedge funds often tout star stock pickers and niche strategies to justify their high fees, performance can disappoint. Hedge funds typically charge a management fee of 2% of total assets under management, plus There is a 20% performance fee on fund profits. Goldman Sachs prime brokerage data shows that hedge funds have been pulling out of technology stocks, especially the chip makers that have won over the past few weeks, while piling into financial stocks and commodities, according to a person familiar with the fund. Wall Street powerhouse Ken Griffin’s flagship multi-strategy Wellington fund, which combines fundamental equities and quants, returned 8.1% in the first half of the year, the person said. The equity strategy’s Tactical Trading Fund, which includes stock picks, rose 13.7%. Bill Ackman’s Pershing Square reported a net performance of 5.7% through June 30. The multi-strategy Apex fund, which includes , macro and arbitrage strategies, was up 13.5% after fees through the end of June, the person said, declining to be named because the information is private. The AQR Delphi long-short equity strategy invests in long exposure. AQR, which shorts investments in riskier, lower-quality stocks, rose 16.3% after fees, also declined to comment.
