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Hedging A Recovery

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Editor’s Remarks:
It is no secret that hedge funds are suffering and when they generated poor returns at the end of 2015, they suffered and witnessed significant outflows. When markets stumbled in 2016 but rebounded strongly and quickly, funds also stumbled but their bounce back was not as high. This seemed to have finally burst the dam and despite the improving performance, funds are seeing outflows continue and strongly. In previous weeks, the market has seen endowment and pension funds voice concern at the high costs of hedge funds but still elected to stick with them. However, with funds, like Japan’s GPIF pension fund declaring billions lost, this is beginning to change. As the 2/20 fee structure continues to be challenged, further automation and low-cost alternatives may cause demand for roboadvisors and passively managed funds to continue to surge.

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