Hedge Funds Underperformed The Market In 2014; Why That May Change In 2015

The rough period that the hedge fund industry went through in 2014 spared no one.

Steve Nadel, partner at Seward & Kissel Investment Management Group, was on Bloomberg to discuss why 2014 proved to be such a disastrous year for the hedge fund industry and the outlook for 2015.

"I think it was a tough year because basically you needed to be fairly long most of the time to do well," Nadel said. "Just looking at the market, over 18,000 today and hedge funds, they mean hedge meaning long-short. So, if you are on the wrong side of a short, you are going to get hammered in these markets. That being said, we have seen certain industries, certain sectors that have done well in this market. Healthcare in particular is up over 10 percent for the year. I think that's driven by a combination of the Ebola scare, ageing population, as well as tremendous development, such as the human genome project and all that."

Outlook For 2015

"Well, hedge funds are meant to be an alternative investment. They are not meant to be long only and in a volatile market, which we are expecting for next year, hedge funds I think are going to do exceptionally well. So, long-short funds, macro, managed futures, event-driven all should do well next year, whereas if you are just riding the bull, you may not do as well," Nadel added.