4 ms·

Your cap gains example is irrelevant. If you have $1m saved up, you could make passive income elsewhere - stock market, mutual fund, real estate - the fact that

by acchow 10y ago

Your cap gains example is irrelevant. If you have $1m saved up, you could make passive income elsewhere - stock market, mutual fund, real estate - the fact that you decided to park it at your employer's fund doesn't make the passive income related to your job. What fund can guarantee better-than-market returns anyway?

JamesBarney 10y ago
Unless you only have access to the fund because of your job.
- acchow 10y ago
  Still irrelevant - funds do not beat the market and you shouldn't be parking your money at your fund, even if your job gives you "exclusive access" to it. If you did, and you miraculously beat the market, that was due to luck and shouldn't be considered a perk of working there, since actually the perk is to get below-market-rate returns.
  - Judgmentality 10y ago
    Renaissance Technologies has consistently beat the market for decades. https://en.wikipedia.org/wiki/Renaissance_Technologies https://en.wikipedia.org/wiki/Renaissance_Technologies
  - JamesBarney 10y ago
    The average fund minus fees does not beat the market. This does not mean "no funds have consistently beat the market" However one of two things happens to funds that consistently beat the market. They either grow to the point where they stop beating the market, or they stop accepting new money. This means that any investor looking to put their money in one a super fund won't be able to, because it's too big, or won't take your money. However this second restriction does not apply if you are working there. Some of these funds give access to their employees. The other option is that some funds give fee discounts to their own employees. So even if the fund doesn't beat the market minus fees, they beat the market sans fees.
ng12 10y ago
There's a whole world of investments you and I don't have access to because we're a few $B short. As a perk some shops allow employees some access to their funds, like a parallel to RSUs or equity.
- acchow 10y ago
  Which of these exclusive funds beats BRK-A?
  - ng12 10y ago
    Famously Renaissance has an employee-only fund that's provided insane returns since the early 90's [1]. It's kind of a ridiculous claim you're making -- that the entire trillion dollar industry is struggling to beat just sitting on the S&P. Capitalism doesn't work that way. [1]. https://www.bloomberg.com/news/articles/2016-11-21/how-renaissance-s-medallion-fund-became-finance-s-blackest-box https://www.bloomberg.com/news/articles/2016-11-21/how-renai...
    - jjeaff 10y ago
      It is a trillion dollar industry but not for beating the market. It's for the fees they charge on assets under management.
- nugget 10y ago
  Calling it "a whole world of investments" is a little extreme. Access to almost all asset classes is available for even the smallest of investors. Absent a mysterious Renaissance-like trading algorithm that magically prints out-performance, diversification is the only free lunch, and it's cheap and easy to massively diversify these days.
  - ng12 10y ago
    I mean there are lots of funds/managers you can only invest with if you have a few hundred million to play with. Sure, they invest in the same asset classes you do except in theory they do it way better.
vostok 10y ago
Completely agree with this. You can't count your hedge fund's returns as compensation. Most hedge funds are terrible and I don't want my money anywhere near them.
- ng12 10y ago
  It's like working anywhere else. If you work at a fund you believe in, you want your money there. If you work at a startup you believe in, you want equity. If you know you're working at a terrible hedge fund why are you working there?
  - vostok 10y ago
    > If you work at a fund you believe in, you want your money there. If you work at a startup you believe in, you want equity. There's a 90% chance I don't believe in the company I work for, whether it's a startup or a hedge fund. > If you know you're working at a terrible hedge fund why are you working there? I'll work anywhere that pays me well. I'm just here to build systems. Ideally, I want as little exposure to the business as possible.
    - ng12 10y ago
      You can't divorce yourself from the business. If the company goes under or does something illegal or morally questionable it affects you. Either way, I'm just saying it's entirely comparable to receiving RSUs or options from a non-finance firm.
      - vostok 10y ago
        No. It's comparable to buying stock or options with your own money at a non-finance firm. I would never do this either. Bonuses are comparable to RSUs/options at non-finance firms.
- deleted 10y ago
  [deleted]

by acchow 10y ago

JamesBarney 10y ago

Unless you only have access to the fund because of your job.

acchow 10y ago
Still irrelevant - funds do not beat the market and you shouldn't be parking your money at your fund, even if your job gives you "exclusive access" to it. If you did, and you miraculously beat the market, that was due to luck and shouldn't be considered a perk of working there, since actually the perk is to get below-market-rate returns.
- Judgmentality 10y ago
  Renaissance Technologies has consistently beat the market for decades. https://en.wikipedia.org/wiki/Renaissance_Technologies https://en.wikipedia.org/wiki/Renaissance_Technologies
- JamesBarney 10y ago
  The average fund minus fees does not beat the market. This does not mean "no funds have consistently beat the market" However one of two things happens to funds that consistently beat the market. They either grow to the point where they stop beating the market, or they stop accepting new money. This means that any investor looking to put their money in one a super fund won't be able to, because it's too big, or won't take your money. However this second restriction does not apply if you are working there. Some of these funds give access to their employees. The other option is that some funds give fee discounts to their own employees. So even if the fund doesn't beat the market minus fees, they beat the market sans fees.

ng12 10y ago

There's a whole world of investments you and I don't have access to because we're a few $B short. As a perk some shops allow employees some access to their funds, like a parallel to RSUs or equity.

acchow 10y ago
Which of these exclusive funds beats BRK-A?
- ng12 10y ago
  Famously Renaissance has an employee-only fund that's provided insane returns since the early 90's [1]. It's kind of a ridiculous claim you're making -- that the entire trillion dollar industry is struggling to beat just sitting on the S&P. Capitalism doesn't work that way. [1]. https://www.bloomberg.com/news/articles/2016-11-21/how-renaissance-s-medallion-fund-became-finance-s-blackest-box https://www.bloomberg.com/news/articles/2016-11-21/how-renai...
  - jjeaff 10y ago
    It is a trillion dollar industry but not for beating the market. It's for the fees they charge on assets under management.
nugget 10y ago
Calling it "a whole world of investments" is a little extreme. Access to almost all asset classes is available for even the smallest of investors. Absent a mysterious Renaissance-like trading algorithm that magically prints out-performance, diversification is the only free lunch, and it's cheap and easy to massively diversify these days.
- ng12 10y ago
  I mean there are lots of funds/managers you can only invest with if you have a few hundred million to play with. Sure, they invest in the same asset classes you do except in theory they do it way better.

vostok 10y ago

Completely agree with this. You can't count your hedge fund's returns as compensation. Most hedge funds are terrible and I don't want my money anywhere near them.

ng12 10y ago
It's like working anywhere else. If you work at a fund you believe in, you want your money there. If you work at a startup you believe in, you want equity. If you know you're working at a terrible hedge fund why are you working there?
- vostok 10y ago
  > If you work at a fund you believe in, you want your money there. If you work at a startup you believe in, you want equity. There's a 90% chance I don't believe in the company I work for, whether it's a startup or a hedge fund. > If you know you're working at a terrible hedge fund why are you working there? I'll work anywhere that pays me well. I'm just here to build systems. Ideally, I want as little exposure to the business as possible.
  - ng12 10y ago
    You can't divorce yourself from the business. If the company goes under or does something illegal or morally questionable it affects you. Either way, I'm just saying it's entirely comparable to receiving RSUs or options from a non-finance firm.
    - vostok 10y ago
      No. It's comparable to buying stock or options with your own money at a non-finance firm. I would never do this either. Bonuses are comparable to RSUs/options at non-finance firms.
deleted 10y ago
[deleted]