So how can hedge funds have more than half their money in stocks and still return, at best, about one-tenth the S&P500? It’s simple, really:
They continued to favor companies that rely on discretionary consumer spending with a net 21 percent weighting, almost 8 percentage points more than their allotment in the Russell 3000 Index. The group is up 5 percent in 2014, the second-worst performing industry among nine in the index.
Energy companies, the worst performing group so far this year with a 1.7 percent drop, are the second biggest hedge-fund weighting at 14 percent, more than 5 percentage points above their Russell 3000 weighting.