Goldman to Hedge Funds: Take More Risk

A report from the Wall Street firm argues that too many funds are loaded up with stocks that don’t generate alpha. What’s needed? More idiosyncratic risk.

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Hedge funds so far are lagging the market this year. If that situation persists, this will be the seventh consecutive year the supposed smart-money set fails to beat the widely followed indexes.

Goldman Sachs seems to think it knows what is causing the underperformance: Hedge funds are not taking enough risk.

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