Investor Carps at Hedge Funds

Hedge funds are to asset allocators as immigrants are to politicians. Just blame them when things go wrong. Consider news from China Investment Corporation that the sovereign wealth fund is booting hedge funds from its approved list over poor returns and high fees. The stance may be self-serving. Institutional investors worldwide have committed capital to hedge funds in expectation that switched-on traders can amply outwit markets. But that tilt was flawed in its assumptions. Those names now struggle to justify the same fees to which they themselves agreed. Returning to our metaphor, offloading the asset class is no more an answer than building a wall at the border.

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