Where have all the hedge funds gone? Advisors weigh in

investmentnews.com:

Does anybody remember hedge funds?

There was a time not too long ago when financial advisors would bend over backwards to get their high-net-worth clients into hedge funds. They would scout for the hottest managers – long/short, global macro, multiple varieties of arbitrage, etc. – and let their charges pay handsomely for the privilege of having Wall Street’s best and brightest manage their money, sometimes to the tune of 2% of assets annually, plus an incentive fee of 20% of profits above a set hurdle rate.

Nowadays, however, the silence surrounding hedge funds and their formerly big-swinging directors is almost audible. The asset class certainly still exists, with around $5 trillion in assets under management globally, but nobody seems to talk about hedge funds much anymore. That is, unless it’s a big activist player like Nelson Peltz agitating for management change at Disney or Bill Ackman doing the same at Harvard.

Seriously, where have you gone, David Einhorn? A nation of accredited investors turn their lonely eyes to the Sohn Conference for a tip on the next big financial firm that’s likely to fail.

“Hedge funds are dead as a doornail,” said Michael Sonnenfeldt, founder of ultra-high-net worth investing club Tiger 21. “Hedge funds have had a secular decline over the last decade because our members who wanted that exposure found that they could get it cheaper and better, less fees with the indexes or go direct with private equity.”

The Tiger 21 Asset Allocation Report for the third quarter of 2023 showed a decrease in allocations to public equity and hedge funds, with corresponding upticks in cash and fixed income. Public equity declined in allocation to 20%, down one percentage point from the previous quarter.