As most of know, my hedge fund is able to be in cash and wait for the “appropriate” opportunity to deploy capital. So far for the last few weeks, this has been the case.
It is true that Hedge Fund managers are expected to make money in every economic cycle and Mutual Fund managers are not. Mutual Fund managers do not have the tools to profit when the market expectations deteriorate and because of this the way they manage risk and their pay is radically different.
So far during Q1 HF manager this better than MF managers but Q2 showed a different picture. I won’t develop here my preference of once vs the others but it is clear that above-average HF managers provide better risk-adjusted returns than above average MF managers.
We have traded about 50% of the trading weeks for 2020 and we could end the year with a +/- 20% or even a near 0% for the SP500 in 2020. I believe that nobody can know future prices with certainty. My job is to trade when conditions give me an optimal risk-reward.
I will keep you updated.