Private equity and hedge fund investors are grumbling about their returns less this year than they did a year ago. On the surface, that sounds like positive news. Unfortunately, the main driver for the change in sentiment is an overall drop in expectations.
Roughly one-quarter of hedge fund investors weren’t pleased with their fund’s performance over the last year, according to a study complied by data provider Preqin. That’s down from 41% in 2012. Meanwhile, around 14% of private equity investors weren’t happy with their firm’s performance over the last year, down from 21% a year ago.
Part of the reason for the drop is that investors simply don’t expect their portfolio to perform as well as they did in previous years. In last year’s survey, nearly 65% of private equity investors said they expected their portfolios to return 4% or more above public markets. That number dropped to 49% this year.
Looking at the hedge fund world, investor ire depends mainly on the strategy. Those invested in CTA and macro funds were the most irate, with 31% and 27%, respectively, believing the strategies underperformed. Event driven funds were the real winners. Nearly one-quarter of investors felt these funds exceeded their expectations over the last year.
The study was first reported by Financial News.
A Revolving Door (eFinancialCareers)
The SEC has had a major problem keeping people in top posts, due mainly to the pull of Wall Street banks. Hiring former regulators says “We’re serious about cleaning up our act.”
Intern Investigation (NY Times)
Bank of America Merrill Lynch has opened a formal investigation into the death of Moritz Erhardt, a 21-year-old intern who died last week after reportedly pulling multiple all-nighters at the firm’s London office.
Imagine His Medical Bills (Dealbook)
Former SAC Capital Advisors portfolio manager Mathew Martoma, already facing charges on insider trading, is facing another indictment after prosecutors allegedly discovered that he received insider information on drug trials from a second doctor.
About Time (WSJ)
With great timing, news has leaked that the Commodity Futures Trading Commission is considering adopting strict rules that oversee high-speed computer trading. The report comes on the heels of disastrous computer glitches that shut down Nasdaq for three hours on Thursday and caused a flood of erroneous options trades at Goldman Sachs earlier in the week.
Lesson Must Be Learned (Financial Times)
One of the founding fathers of modern options trading believes the only real way to avoid trading glitches like the one that affected Goldman is to force the firms to absorb the full brunt of the losses, rather than cancelling the trades like Goldman was allowed to do. “If trades are not cancelled…they would be more careful,” said Myron Scholes.
Fairy Tale (Bloomberg)
J.P. Morgan would be worth as much as 30% more if it were broken up into four separate divisions, says KBW analyst Christopher Mutascio. Good luck pushing that one.
Troubling Arrest (NY Times)
Goldman Sachs managing director Jason Lee was arrested and charged with first-degree rape last week after he allegedly sexually assaulted a 20-year-old woman. Lee, who is now on leave from Goldman, adamantly denied the charges through his lawyer.
Buzz Around the Office
Just Hold It (Business Insider)
Want to be a success, either on Wall Street or in any other line of work? Stop going to the bathroom so darn much, says New York City Mayor Michael Bloomberg.
List of the Day: Startup Advice
If you’re thinking about joining a startup and expect to be promoted, keep these tips in mind.
- Join a growing company, not just a small one.
- Be upfront about your goals.
- Even if you’re not a manager, be a leader.
(Source: The Daily Muse)