No matter how hard the hedge fund industry tries to emphasize its aim of generating uncorrelated "absolute" returns, the media seems intent in comparing it to equity indices (despite the fact that many hedge funds ply their trade in markets other than equities anyway).
This week is no different with several media outlets reporting that hedge funds have beaten the S&P year to date. The resulting optimism seems to have unearthed rebuttals to several common (negative) assumptions about hedge funds. July's most popular AllAboutAlpha.com posts read like a list of retorts to accusations of hedge funds being overleveraged ("More evidence that the amount of leverage used by hedge funds was never as great as many assumed"), expensive ("HF fee squeeze - Not such a new thing"), and lacking in integrity ("Closer look at the CFA Institute's survey of integrity shows HFs not as bad as reported.")
Assumptions about the Sharpe Ratio ("Debate over value of Sharpe Ratio in HF analysis continues in new academic study") and the CAPM itself ("How Hollywood, lotteries and mutual funds show that all risk is relative") have also recently been challenged.
Summer is often a time of reflection and renewal. If last month's most popular posts are any indication, we may see a very different hedge fund community emerge in September than went in last June.
Then again, summer is only half over...