2 ms·
His original partnership was a hedge fund and he did have an incentive fee. His logic is that large fees on top of what can be excruciating fees by PBs are a m
by cliftonk 10y ago
His original partnership was a hedge fund and he did have an incentive fee.
His logic is that large fees on top of what can be excruciating fees by PBs are a major drag on realized returns. And given beta is the average, gross of fees, of all the alpha, then it holds that a material drag on the average will cause most active managers to do worse than the market.
- curuinor 10y agoBuffett Partnership Ltd paid 4% interest and 50% profits above 4%, and if there was a loss 25% of it was hit directly to Buffett, unlimited. Friends and family only. Buffett and Buffett charged jack shit. Again, extremely limited. The important thing he was criticizing was the excruciating fees, I think.