Long/short equity funds are having a tough year… To help with some context around performance, we shared our latest data with Lydia Tomkiw of FundFire.
Through the end of September, the PivotalPath Equity Sector Index was down 16.5% and the majority of subsectors are negative for the year. Hedge funds focused on technology, media and telecom (TMT) are down the most at 21.9%, followed by consumer/retail focused funds down 14.8% and health care funds down 14.7%. Funds focused on energy, utilities and industrial are slightly in the green up 0.9% for the year.
As Jon Caplis notes, many long/short equity managers “had an inkling this would be a difficult environment and decided to make a move into cash instead of timing markets – making risk management a bright spot.” But with performance where it is, questions around what allocators are paying these managers to do begins to rise…
Additionally, “with dispersion at extreme levels, investors are likely to again question the fee levels they are paying to managers in the long/short space.”
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