Event-Driven Funds Are The Peyton Manning Of 2015 (In That Their Performance Has Been Surprisingly Terrible)


This foul year of our Lord 2015 has had more than its share of disappointments. Yogi Berra died. Dick Van Patten, too. Sepp Blatter remained president of FIFA, sort of. Greece elected a Communist prime minister, who then caved like all of his predecessor non-Communist prime ministers, but was reelected anyway as the Greek nightmare continues, disappointing people on all sides of the political spectrum, as well as those who just don’t want to read about Greek debt anymore. And Steve Cohen’s apartment has still not attracted a sniff.

But the worst thing of all? The absolute worst part of this miserable year? Event-driven hedge funds, which started out the year with all the promise of a fresh 365 and all manner good omens. But boy oh boy have those things stunk the place up.

Event-driven hedge funds that seek to profit from corporate activities such as mergers, acquisitions and reorganizations lost on average 1.4 percent this year, according to an index compiled by Chicago-based Hedge Fund Research Inc. Allen & Co. announced in September that it was shuttering the merger arbitrage strategy that it had offered clients since 1975, in part because of poor returns for such funds. Hutchin Hill Capital closed a portfolio managed by Steven Mermelstein that made wagers on corporate events.

"The worst disappointment relative to our expectation at the start of the year and throughout the year would have been event,” Christian said. “You have all the matrices that tell you it should have been a great year for event-driven.”

Event-Driven Hedge Funds Are The ‘Worst Disappointment,’ Says K2 [Bloomberg]