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Analysis: The great hedge fund humbling of 2011

Analysis: The great hedge fund humbling of 2011
By Svea Herbst and Katya Wachtel | Reuters – 3 hrs ago…

BOSTON/NEW YORK (Reuters) – Excuses, excuses and more excuses.

The result was a humbling year for the $1.7 trillion hedge fund industry, with the average fund dropping 4.8 percent and some stock-focused funds suffering an average 19 percent decline, according to research compiled by Hedge Fund Research and Bank of America Merrill Lynch analysts.

Not everyone is buying the hedge fund managers’ excuses. These skeptics are saying that no matter how smart the managers may be, they are prone to make mistakes just like everyone else and are not necessarily blessed with perpetual special insight into markets.

Industry observers say what tripped up many famous managers in 2011 was that far too many traders were piling into the same large stocks

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