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> 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 $

> 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 11y ago
That 2% is what you'd get charged by ANYONE with the skill and operations to manage that level of money.
- oarsinsync 11y 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 11y 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 11y 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 11y 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 11y 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?
        tluyben2 10y ago
        I express opinions (which is what we do here right?). If you read those as 'definitive statements' then I might have phrased them differently if I had known. I tend to talk that way and I try to add 'in my opinion' / imho to stuff but here I guess I did not (enough). And sure, I don't consider shuffling money around in a way that is actually inaccessible to 'normal people' to make rich people richer (obscenely rich) to be something 'good'. That's my opinion and I guess you can read that in my way of saying things. That said, I am interested in it. And what I read about it (which is indeed what I read online) makes me have those opinions and nothing in this thread makes it less rancid so far. But because I have been wrong I read other opinions and explanations. The word 'this' is missing from the last sentence, apologies, I fixed it. So my question is; if a hedge fund grows from 5 billion to 10 billion it incurs double the cost of operations? Like, for instance, a software services company would do? If not, then why are the fees a % and not a fixed number based on operational cost, unless it's mere easy pocket filling because 'everyone else does it'?

Nrsolis 11y ago

That 2% is what you'd get charged by ANYONE with the skill and operations to manage that level of money.

oarsinsync 11y 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 11y 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 11y 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 11y 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 11y 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?
      - tluyben2 10y ago
        I express opinions (which is what we do here right?). If you read those as 'definitive statements' then I might have phrased them differently if I had known. I tend to talk that way and I try to add 'in my opinion' / imho to stuff but here I guess I did not (enough). And sure, I don't consider shuffling money around in a way that is actually inaccessible to 'normal people' to make rich people richer (obscenely rich) to be something 'good'. That's my opinion and I guess you can read that in my way of saying things. That said, I am interested in it. And what I read about it (which is indeed what I read online) makes me have those opinions and nothing in this thread makes it less rancid so far. But because I have been wrong I read other opinions and explanations. The word 'this' is missing from the last sentence, apologies, I fixed it. So my question is; if a hedge fund grows from 5 billion to 10 billion it incurs double the cost of operations? Like, for instance, a software services company would do? If not, then why are the fees a % and not a fixed number based on operational cost, unless it's mere easy pocket filling because 'everyone else does it'?