Publicly Traded Hedge Funds Continue to Disappoint

Simon Riveles Hedge Funds, Publicly Traded Hedge Fund

On Tuesday, the London based Man Group, the world’s largest publicly traded hedge fund, reported Q1 investor redemptions of $1 billion. The money manager, known for its quant-based strategies, has been hemorrhaging assets for several quarters after reporting lackluster results for its flagship fund. The AHL fund was down 6% last year and is down 2% in 2012. Man’s AUM is now less than when it merged with GLG, a multi-billion dollar competitor, in 2010. As a result of this underperformance Man’s stock price has crumbled to an 11 year low and was the worst performing stock in the FTSE 100 last year. It remains relatively rare for hedge funds to be publicly traded and Man’s troubles only underscore why this is so. Two other well known funds, Och-Ziff Capital Management and Fortress Investment Group, have also fared poorly in the public markets Och-Ziff trading at a third of its IPO price and the stock of Fortress having dropped nearly 90 percent since 2007. The short term focus of the public markets have proven problematic for hedge funds whose on-going viability is fundamentally tied to quarterly performance to a much greater extent than other public companies, such as P&G, for example, whose long term business viability is not affected nearly as closely with quarterly performance.

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