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Hedge funds have delivered subpar returns for more than a decade, but a new survey from Preqin finds many investors are planning to stick with them because they fear another sharp market downturn is coming.

What it means: Half of the investors surveyed said their hedge fund allocations failed to meet expectations, and only 37% believe 2019 performance will exceed 2018’s levels. This follows an Axios analysis that found hedge funds had underperformed the S&P 500 by more than 100% since 2009 and less than 1% of the gain in Americans' financial assets has been in hedge funds since 2015.

Yes, but: 61% of investors in Preqin's survey say the current equity market cycle has peaked (up from 45% a year ago) and 40% are looking to position their hedge fund portfolios more defensively as a result. Further, 4 out of 5 investors plan to hold or raise their allocation to hedge funds over the longer term — the highest proportion since 2014.

  • Hedge funds did much better than traditional equities during the global financial crisis.

The impact: "This is a pivotal moment for the hedge fund industry," Amy Bensted, Preqin's head of hedge fund products, said in a release.

  • "Fund managers may be optimistic about their longer term relationship with investors, but they will need to work hard in the coming months to effectively attract and retain capital."

Go deeper: Explore why the hedge fund moment is over

Go deeper

Updated 4 hours ago - Politics & Policy

Supreme Court backs religious groups on New York coronavirus restrictions

Photo: Saul Loeb/AFP via Getty Images

The U.S. Supreme Court ruled late Wednesday that restrictions previously imposed on New York places of worship by Gov. Andrew Cuomo (D) during the coronavirus pandemic violated the First Amendment.

Why it matters: The decision in a 5-4 vote heralds the first significant action by the new President Trump-appointed conservative Justice Amy Coney Barrett, who cast the deciding vote in favor of the Catholic Church and Orthodox Jewish synagogues.

USAID chief tests positive for coronavirus

An Air Force cargo jet delivers USAID supplies to Russia earlier this year. Photo: Mikhail Metzel/TASS via Getty Images

The acting administrator of the United States Agency for International Development informed senior staff Wednesday he has tested positive for coronavirus, two sources familiar with the call tell Axios.

Why it matters: John Barsa, who staffers say rarely wears a mask in their office, is the latest in a series of senior administration officials to contract the virus. His positive diagnosis comes amid broader turmoil at the agency following the election.

Bryan Walsh, author of Future
11 hours ago - Health

COVID-19 shows a bright future for vaccines

Illustration: Annelise Capossela/Axios

Promising results from COVID-19 vaccine trials offer hope not just that the pandemic could be ended sooner than expected, but that medicine itself may have a powerful new weapon.

Why it matters: Vaccines are, in the words of one expert, "the single most life-saving innovation ever," but progress had slowed in recent years. New gene-based technology that sped the arrival of the COVID vaccine will boost the overall field, and could even extend to mass killers like cancer.