Dear Copiers&Followers, Below you will find a very interesting article about how the Hedge Funds industry has performed so far this year. Here are the basic conclusions from my side:
◼ HFs still struggle to make a competitive race with ETFs and actively managed mutual funds.
◼ No single HF strategy has outperformed the $SPX500 YTD, even though the industry still disputed about whether the HFs’ performace should be compared to the wide market index at all, given the fact that their primary target is to hedge and provide uncorrelated returns in market diruptions. I tend to agree that the most common tendency of comparing nominal returns of different strategies to the indices like $SPX500 makes not much sense. It is much wiser to compare strategies on a risk-reward basis, i.e. by calculating the average return per unit of risk (return/volatility or return/max drawdown absolute value). Here are the 2020 stats for return/max drawdown characteristic:
Hedge Funds 1x
GlobalLeadersPortfolio (GLP)(my portfolio)* 4,6x
* Back in 2020 the GLP was not yet at eToro, but was fully run on my site www.globalalphasearch.com. The summary of 2020 performance can be found here: globalalphasearch.com/montlhy-rebalancing-dec-2020/ The ratio is based on the following data: return +17,5%, max drawdown -3,8%.
◼ As you can very well see in the above paragraph for 2020 you got 0,5 unit of gain for each 1 unit of maximum drawdown that you had to accept if you held solely the $SPX500 (or $SPY) in your portfolio. Should you have invested (theoretically) in an “average Hedge Fund) you would have got 1 unit of gain per 1 unit of drawdown you’d face. But would you have decided to have a portfolio like I had (the GLP), you would have gotten as much as 4,6 units of gain per one unit of drawdown. And that’s exactly what quality is 😊😊😊. My portfolio (which you can Copy now) concentrates on giving the best possible risk-reward ratio to the investors, which pays best in hard times like the year 2020. Current Sharpe ratios is close to 1,7, Sortino around 3,4.
$NSDQ100 $DJ30 $GER30
Disclaimers: None of the ideas, views and thoughts presented here shall ever be taken as a recommendation to buy or sell stocks,bonds,FX,commodities or any other financial instruments as stated in REGULATION (EU) No 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC or the Polish Act of 10 February 2017 amending the act on trading in financial instruments and some other acts. The article is for educational reasons and purely presents private views of the author, thus the author shall not be held accountable for any losses of a third party resulting from any potential trading activities in any instruments, both specifically or by category of assets. The author uses his best knowledge and data from sources believed to be reliable, but makes no representations as to the accuracy of the data.Full Disclaimers&Liability Limitations page.