Clients of Canadian hedge funds should start demanding more for their money, because the returns they're getting simply aren't up to snuff.
The latest aggregate returns from over 70 Canadian funds are underwhelming, if not head-scratching. From January to October, hedge funds lost 4.5 cent, when weighted by their size.
Meanwhile, the S&P/TSX Composite Index was up 3.9 per cent over the same period, and the S&P 500 was up 10 per cent when quoted in Canadian dollars.
Hedge funds also posted negative returns last year, losing 3.8 per cent in 12 months. But the TSX also fell in 2011, shedding about 10 per cent.
So what's causing the discrepancy now? Hard to tell from the aggregate numbers. But if your first instinct is to blame commodity prices, you might want to be a bit wary. A number of materials names have rallied in the past few months, but that still hasn't boosted the aggregate returns much higher.