Hedge Fund News Wrap: Week Ending 12/05/14

Warren Buffett looks to be in prime position to win his bet with hedge fund Protégé Partners. Buffet wagered that the S&P 500 bought from an inexpensive index fund could outperform any hedge fund. With about three years left on the 10-year bet, the contest has not been close. The index fund has risen by 43.8%, while the hedge fund’s investments’ have increased by 12.5%. Fees also factor significantly into the investments. Clients of hedge funds have to give up 20% of profits in addition to an 2% expense ratio. In contrast, an index fund only costs a miniscule 0.05%. This year has been especially bad for hedge funds, as many have made unwise investments in the declining commodities sector, leading to record closings and average returns of only 2%.

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Uber’s Value Continues to Skyrocket

With an eye on pushing global expansion, Uber has raised $1.2 billion after raising the same amount last June, increasing its value from $18 billion to $40 billion. Bill Gurley, a board member and venture investor of Uber, said “We feel remarkably good about where we stand in the domestic market and our real growth initiatives are focused internationally.” Uber has not been slowed down by the negative press that it has received or the regulations and laws that it is combating throughout the world.  CEO Travis Kalanick believes that the company is still learning and that the laws will adjust to the service in time.

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Wall Street Journal


New York Life Accesses ETF Market By Buying IndexIQ

After rumors that Goldman Sachs was interested in purchasing Index IQ, part of the rapidly-expanding ETF industry, New York Life Insurance has bought the company. Drew Lawton, CEO of New York Life Investment, says that the purchase “puts us into the forefront of two very important growth trends in the industry. Not just ETFs, but also alternatives and, maybe more specifically, liquid alternatives.” After a string of deals this year to purchase asset management companies, New York Life hopes to go beyond its core policies and diversify what it offers its customers. Adam Patti, CEO of IndexIQ, said, “Hedge funds are never going to beat the S&P 500 in a roaring bull market. They’re going to provide much lower volatility, and downside protection.”

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Bloomberg News