9 ms·

If you don't think investing billions of dollars skillfully such that you don't lose any of it and earn a risk-adjusted return that's better than your peers is

• oarsinsync 10y ago
  > If a hedge fund manager earns $1 billion, you can be assured that he grew his customers investments by something like $4 billion. > For every guy that makes $1 billion, there are a thousand or more that don't get anything close to the salary that a medium-salaried employee at a decent startup gets because they LOST their investors money. Given the 2/20 rules that a lot of funds follow, that's not strictly true. If you're managing a $10bn fund, and working on 2/20 (2% fee, 20% performance), you're taking $200m off the front just for managing the money. Regardless of profit or loss, you've got that money. You're then taking another 20% off of any profits you're making, when you're making them. And then keeping them even if you end up losing money the next quarter, that money's still yours.
  • Nrsolis 10y ago
    That 2% is what you'd get charged by ANYONE with the skill and operations to manage that level of money.
    • oarsinsync 10y ago
      > That 2% is what you'd get charged by ANYONE with the skill and operations to manage that level of money. Also not strictly true. Some of the large funds with (confidence in their ability to perform|managing enough money to not care about massive performance anymore) operate on 1/20 rather than 2/20.
    • tluyben2 10y ago
      What does skill and operations mean here? It's an honest question; I don't know. And that 2% is literally for doing nothing then right? You don't make it sound less disgusting now that 'anyone' does that? Edit: sorry, read another thread of yours that 2% is covering cost; how can it be a % if it is covering cost? Cost goes up when the $ goes up? How does that work? Again, not trying to be annoying here.
      • whatok 10y ago
        You have a lot of posts on this topic and do not seem to have something resembling even a remote understanding of the topic. > Edit: sorry, read another thread of yours that 2% is covering cost; how can it be a % if it is covering cost? Cost goes up when the $ goes up? How does that work? Again, not trying to be annoying here. If my business grows, chances are some business-related expenses grow along with it. How is this any different?
        • tluyben2 10y ago
          > You have a lot of posts on this topic and do not seem to have something resembling even a remote understanding of the topic. So I can't ask? :) Some people here seem to know and I'm interested so I ask? Weird remark as if the number of posts should indicate deep knowledge. > If my business grows, chances are some business-related expenses grow along with it. How is this any different? Along with it? There definitely are businesses that grow linear with their revenue but this seems not to be one of them.
          • whatok 10y ago
            You have some very definitive statements in this thread but also show no knowledge on the topic. I try to not speak strongly from a place of ignorance but do you. > Along with it? There definitely are businesses that grow linear with their revenue but seems not to be one of them. I don't know what the second sentence of this means. Are you missing a word in there?
            • 10y ago
• estefan 10y ago
  > If a hedge fund manager earns $1 billion, you can be assured that he grew his customers investments by something like $4 billion. Um, no you can't. A lot of hedge funds don't charge performance-related fees. Some of the best performing managers one year go on to be massive losers in another because they're taking so much risk.
  • Nrsolis 10y ago
    Please cite a hedge fund that doesn't charge performance allocations. And those funds that LOSE money for their investors also don't MAKE money for their fund managers.
• peonicles 10y ago
  Granted they are skilled at what they do, but I think the point is that they don't create much, if anything of actual value.