The knives are out for hedge funds. After making a healthy profit from shorting bank shares, four hedge-fund managers were brought before the Treasury Select Committee. It seems that making lots of money for their investors needed some sort of explanation. Quite why this is the case, isn't clear, given that senior bankers such as RBS's Sir Fred Goodwin got away with huge value destruction without so much as an apology.
Perhaps profitable hedge funds instantly raise suspicions these days. Last year, the average fund lost 18.3%, according to Hedge Fund Research the worst annual performance since 1990. That might not sound bad when compared with the 37% drop for the S&P 500. But when fees are commonly 20% of profits, it's not good enough.
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