What does it say about stocks when hedge funds and money managers are selling off holdings and returning cash to investors?
As I’ve said prior, there is no hedge against the Federal Reserve and central banks. When you see the Swiss central bank’s equity holdings in Apple, Amazon and the other high-flying, all-time high stocks, the hedge fund industry doesn’t have the liquidity to fight them and should not charge 2-and-20 percent fees for holding them.
While the Fed — by degree — cannot hold US equities, that does not go for the Japanese central bank or European central bank as well as the Swiss. But through cross-platform operations central bankers can easily keep equity markets afloat even in the worst of times.
In this environment how can a hedge fund find an alternative investment worthy of cash infusion that can outperform the chosen few stocks favored by central banks with unlimited liquidity?
So the number of funds that have returned money in 2017 has been growing as money managers can only see the downside to holding cash. The latest fund to come to this revelation is Altair Asset Management, which turned over hundreds of millions back to its investors.
“Giving up management and performance fees and handing back cash from investments managed by us is a seminal decision, however preserving client’s assets is what all fund managers should put before their own interests,” Philip Parker, who serves as Altair’s chairman and chief investment officer, said in a statement on Monday.
It’s an admission that funds can’t find alternative investments worthy of justifying the charging of fees. Welcome to the new investment landscape where hitching your portfolio to the anointed holdings can make you just like these big players on the Street.