Tuesday, September 2, 2014

Hedge Fund Woes

It continues to be a tough year for hedge funds. Goldman Sachs tracks the performance of the nation's largest hedge funds, and found that through the middle of August, they had returned just 1 percent. Over that same time frame, the S&P 500 had returned about 7 percent on the year.

What's gone wrong with the hedge funds? Goldman Sachs' analysis found that they had heavily invested in consumer discretionary stocks, including retailers. The consumer discretionary sector has been the worst-performing of the S&P's ten sectors this year; through the end of August, it was up a little less than 3 percent in 2014.

Among the stocks the hedge funds are most invested in, one of the most popular is General Motors. Hedge funds own roughly 7 percent of all GM shares. General Motors stock has lost 15 percent of its value this year.

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