Between January 1998 and July 2012, hedge funds had impressive returns of 5.40% annually, with a risk-adjusted “alpha” of 1.8 percentage points, according to financial theorist William Bernstein in Skating Where the Puck Was.

But the return has been awful lately, with the alpha around -4.5% annually between 2008 and 2012. While hedge funds returned a positive 7.4% in 2013, they badly lagged the U.S. stock market return of 33.4% from a total stock index fund.

Register or login for access to this item and much more

All On Wall Street content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access