Steben & Company White Paper | Myth Busting: Hedge Funds are Dead

GAITHERSBURG, Md., Nov. 30, 2017 /PRNewswire/ -- Steben & Company, Inc., a leading alternative asset manager, today released its latest white paper and video overview entitled 'Myth Busting: Hedge Funds are Dead,' which examines many of the key arguments made against hedge funds.

"Hedge funds have seemingly fallen out of favor over the course of the second longest equity bull market in history. A policy of unprecedented quantitative easing (QE) has supported a rising tide environment, ripe for long-only passive (index) investing in traditional asset classes. As performance of hedge funds has lagged equity markets, a steady stream of news articles has sounded the death knell for the industry," said John Dolfin, Chief Investment Officer of Steben & Company. "We set out to analyze the empirical data so that we could separate the facts from the sensationalism. The results debunk the myths we tend to hear about most often."

Key takeaways from the white paper include:

• Myth: The "Smart Money" is Getting Out of Hedge Funds
  Capital invested in hedge funds by US public pension funds has grown steadily in recent years (now over $315 Billion), while the average endowment has maintained an approximate 19% allocation to hedge funds over the last 5 years.
                                                                         
• Myth: Hedge Funds Underperform the Equity Markets Over the Long-Term
  A long-term historical performance comparison of hedge funds (HFRI Fund Weighted Composite Index) and stocks (S&P 500 TR) suggests the recent performance gap is cyclical rather than structural. Stocks have outperformed since 2009, but hedge funds remain marginally ahead for the period starting January 1990 through September 2017.
                                                                         
• Myth: Hedge Funds Don't Provide Diversification
  Prior to the 2008 financial crisis, hedge fund correlations to the S&P 500 ranged from 0.4 to 0.8. Post crisis correlations have moved higher to 0.8 to 0.9, mostly due to higher beta equity long/short and event driven strategies. Equity market neutral and global macro strategies have maintained lower equity correlations of around 0.3.
                                                                         
• Myth: Fees are Too High and Liquidity is Too Low
  Hedge funds continue to evolve in response to the environment and fees have declined on average. Many managers now offer hedge fund strategies within highly liquid, lower fee investment vehicles such as alternative mutual funds and European UCITS funds.

To read the full white paper or to view the brief video that complements the white paper, please visit www.steben.com/education-and-resources or contact us at 240.631.7600.

About Steben & Company

Steben & Company is a leading alternative asset manager that specializes in multi-manager products including fund of hedge funds and managed futures strategies. Steben's investment philosophy is defined by high conviction, actively managed exposures with a focus on more liquid, lower beta strategies. Steben's funds are designed to provide investors with the potential benefits of diversification and the opportunity for absolute returns regardless of market direction.

Steben is an alternative investments innovator with more than 25 years of continuous operating experience.

For more information, please contact: 
Peter Weinberg, Head of Investor Relations & Marketing  
Steben & Company, Inc.  
[email protected]  
240.631.7620
www.steben.com 

DEFINITIONS

Correlation: A measure of the degree to which two variables relate to each other.

HFRI Fund Weighted Composite Index*: A global, equal-weighted index of over 2,000 single-manager hedge funds that report to the HFR Database. Constituent funds report monthly performance net of all fees in US dollars and have a minimum of $50 million under management or a 12-month track record of active performance. The HFRI Fund Weighted Composite Index does not include funds of hedge funds. The current month and the prior three months returns of the Index are estimates and are subject to change. All performance prior to that is locked and is no longer subject to change.

Standard & Poor's 500 Total Return Index with Dividends Reinvested*: The 500 stocks in the S&P 500 are chosen by Standard and Poor's based on market size, industry representation, liquidity and stability. The stocks in the S&P 500 are not the 500 largest companies; rather the Index is designed to be a leading indicator of US equities and is meant to reflect the risk/return characteristics of the large cap universe.

UCITS Fund: UCITS (Undertakings for the Collective Investment of Transferable Securities) is an open-ended European investment fund established in accordance with the UCITS Directive. UCITS must be organized under the laws of an EU member state and subject to regulation by the EU member state in which it is domiciled. Once registered in one EU country, the fund can be marketed throughout the EU and other jurisdictions that recognize UCITS, subject to local marketing requirements.

*It is not possible to invest directly in an index.

RISK CONSIDERATIONS  
Risks include the possible loss of principal. Steben Select Multi-Strategy Fund is part of a master-feeder structure and invests in a closed-end, non-diversified investment company with the same objectives and strategies (Master Fund), which in turn invests in hedge funds (Portfolio Funds). Fund investors will bear fees and expenses of the Fund, which includes the Fund's pro rata portion of the fees and expenses of the Master Fund and, indirectly, of the Portfolio Funds (including performance fees). An investment in the Fund is speculative. There is no guarantee that the Fund will achieve its investment objectives. Any investment should be viewed as part of an overall investment program and should only be made by investors willing to undertake the risk involved. Diversification among multiple hedge funds does not assure profit or guarantee against a loss. The Portfolio Funds may be highly leveraged, be highly illiquid and invest substantially in a particular market or sector. As a result, the Portfolio Funds (as well as the Fund) may be subject to greater risk and volatility than if investments had been made in the securities or derivatives of a broader range of issuers. The Fund's performance depends on the performance of the Portfolio Funds and the Investment Manager's ability to allocate Fund assets among Portfolio Funds. The Fund's shares are not listed on any securities exchange, and it is not anticipated that a secondary market for shares will develop. The Fund cannot guarantee that investors will be able to effect repurchases of as many shares as they request.

Before investing, you should carefully consider the Fund's investment objectives, risks, charges and expenses. For a prospectus that contains this and other information about the Funds, please contact Steben & Company at 240.631.7600 or [email protected]. Please read the prospectus carefully before you invest.

Foreside Fund Services, LLC, Distributor

SOURCE Steben & Company, Inc.

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