ETFs are now larger than hedge funds in total AUM terms
Having trounced actively managed funds, EFTs are now the bully kicking sand in the face of the hedgies. Exchange-traded funds have now ballooned to USD 3.2 tn in assets, eclipsing hedge funds “as investors pile into low-cost offerings to capture the multiyear market rally,” the Financial Times reports. “For many years, hedge funds generated returns beyond those investors could gain from exposure to market benchmarks — known as “alpha” — according to a note in August from the capital introduction group at Barclays. But as the industry grew, performance faltered. Hedge funds stopped generating excess returns in 2011, and since then have underperformed benchmarks.” Pension funds have since cut their exposure. We have issues with hedgies, but absentee landlords (as we like to think of ETFs, stealing boldly from Saker Nusseibeh) bother us significantly more — we hope to be grumping about that this Friday when the Weekend Edition returns.