The hedge fund industry has been taking a lot of heat in recent days and years for delivering poor performance at a high cost.
Indeed, according to a recent report from Goldman Sachs, the average hedge fund returned a measly 2.5% during the first half of the year compared to the S&P 500 which returned 12.6% (13.8% including dividends).
It's worth noting that
According to Goldman's analysis, much of the hedge fund industry's underperformance is attributable to these short positions.
In fact, the hedge funds' large long positions have actually outperformed the S&P 500, which is a pretty incredible feat.
Here's Goldman Sachs' David Kostin:
Interestingly, hedge fund long stock positions have actually delivered solid returns in 2013. Our Hedge Fund Very-Important-Position (VIP) List has returned 14% YTD (Bloomberg ticker:
Here's Goldman's chart showing the distribution of returns for hedge funds and mutual funds.
Goldman Sachs