TECH - Hedge Fund Investors Pull $100B From Market As Stock Pickers Underperform | Benzinga
More than $100 billion was withdrawn from hedge funds in 2023, following similar outflows in 2022 as investors tired of strategies that have been underperforming the market for several years.
What Happened: Data, provided by Nasdaq eVestment showed that among the worst-performing strategies was the equity long-short fund — where hedge fund managers buy stocks they think will perform well and bet against stocks they believe are likely to fall.
Indeed, investors have pulled more than $150 billion from this type of fund over the past five years as they have underperformed the market in nine of the past 10 years.
The equity long-short fund has been around for decades and was generally successful during periods of broadly calm market conditions as so-called “star stock pickers” were able to capitalize strongly on market fluctuations by buying long and selling short.
When more turbulent conditions persist, it becomes much more difficult for stock pickers to predict. One of the chief problems for pickers last year, however, was the expectation that several mega-cap stocks had become so overvalued that they had become ripe for shorting.
Why ...