By Neil Wilson
The hedge fund industry has just endured another gruelling year – the second worst year on record (after 2008), and the second negative year in just the last four. Last year’s stop/start pattern of ‘risk on, risk off’ in the markets clearly took its toll. And the outlook ahead continues to appear challenging.
Yet, strangely perhaps, the immediate outlook doesn’t seem so bad as in late 2008. I say ‘strangely’ in part because the relative returns had been much more pronounced in 2008. In 2011, hedge funds again did better on average than global equities but, with a mean average return of nearly -4.5% according to the HedgeFund Intelligence indices, it was not by such an impressive margin.
Perhaps the outlook seems better because we have got used to living in a semi-permanent state of crisis. In the immediate term, however, the more important...