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Hedge funds caught out as short selling costs them dear

Hedge funds have been caught out trying to predict crashing stocks, losing 16% through short selling strategies year to date.

According to a fresh analysis, short selling has proved a losing strategy, clocking up the biggest losses of 13 monitored by the EDHEC-Risk Institute.

Short selling strategies shed 1.57% in November alone, according to the analysis, and aside from global commodity trading strategies, which lost 0.08%, no other strategy lost hedge funds money during November.

Despite a number of investors looking to hedge fund trends as a canny way to root out ideas, it is not the first time traders have landed on the wrong side of short trades.

A study published by EDHEC in August found short selling strategies had made nothing.

Year to date, the best strategy was distressed securities, which notched up a 10.7% cumulative return, followed by relative value, which returned just over 8%. 

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Profile: The opportunity set that attracted Brett Williams to wealth management

Profile: The opportunity set that attracted Brett Williams to wealth management

Brett Williams is best known for helping to build some of the biggest platforms in the IFA market.He made the move over to wealth management to head SEI’s UK business earlier this year in the belief that this is where the best opportunities now lie.

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