Hedge funds cannot seem to shake off the bad rap--but perhaps they deserve it. Asset outflows in the last three months of 2016 amounted to $43 billion, representing the highest quarterly decline the industry has seen since the great financial crisis, according to an eVestment report.
Redemptions were largely driven by poor performance and scandals, notwithstanding the high fees associated with HF strats. Some of the worst performing and/or nefarious hedge funds of 2016 include:
Platinum Partners – the founder and other executives were charged in a $1 billion securities fraud indictment last month. The firm had $1.3 billion in assets under management as of the end of March. (USA Today)
Pershing Square Holdings told its investors that the fund declined by 13.5% net of fees for the first 11 months of 2016, according to the New York Times. In comparison, the Standard & Poor’s 500 index was up 7.6% over the same period.
Och-Ziff Capital Management settled a federal bribery probe in September and saw assets decline by $3.6 billion in December. (Bloomberg)
The head chief at Omega Advisors, Leon Cooperman was charged with insider trading by the Feds in September. The fund has since declined by half to nearly $3.4 billion, CNBC reported.