One of the biggest themes we talk about at PivotalPath is the importance of context when analyzing the hedgefund industry. Without a deeper understanding of the different variables at play, it’s impossible to evaluate performance among strategies or individual funds.
With the outperformance of larger hedge funds so far in 2022, this is more important than ever. As we shared with Julie Segal of Institutional Investor, and she lays out in detail, large funds may be outperforming in 2022 but rather than suggest a preference for larger funds going forward, much of the outperformance is unique to the current economic environment and crises environments in general. Smaller funds have outperformed in 20 of the last 24 in the years between 1998 and 2021.
However, even selecting the right strategy for the current environment doesn’t reduce the importance of selecting the right manager. In fact, in highly volatile markets, manager selection becomes even more vital as demonstrated by the dispersion in Managed Futures (the top performing hedge fund strategy YTD) between the top and bottom quartiles of funds is 20.5% annualized so far in 2022 – double the average of the past decade.
Check out the full article below!