2 ms·
> If you want to outperform the market, however, you need to find a GREAT hedge fund that charges 1% management fee (at most) and an incentive fee...otherwise i
by nickles 11y ago
> If you want to outperform the market, however, you need to find a GREAT hedge fund that charges 1% management fee (at most) and an incentive fee...otherwise it doesn't make sense to pay a flat fee to a MF and get just average performance. (There are exceptions as some MFs do consistently outperform the market but these are few and FAR between).
You'll have difficulty finding even a good hedge fund at 1% management fee. Most charge what's known as Two and Twenty -- 2% of assets under management and 20% of profits. Point72 charges as high as 3% and 50%.
- usertaken 11y agoI work in the industry. You are right on a general basis but there are plenty of funds that don't get a lot of press and kill it year in and year out AND charge less than 2 and 20. Most hedge funds are, at best, average because they don't know what they're doing. Don't blindly give 2 and 20 to an avg. hedge fund. Do the math and giving even 2 and 20 to a superstar will allow you to compound at a much faster rate than the S&P500.