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I expect that you are right about a significant number of funds (I would say most long-only funds). But a decent chunk of the industry exists because investors
by physguy1123 9y ago
I expect that you are right about a significant number of funds (I would say most long-only funds). But a decent chunk of the industry exists because investors want higher-sharpe investments than the market even if they don't beat a bull market and/or investments that will remain uncorrelated with the market.
This is a reason why a lot of money is flowing into quant funds despite the overall outflow, because most quant strategies do great in volatile markets (but mediocre otherwise) where other funds are the market+fees.
- osrec 9y agoYes, my reply was focusing on equities as the s&p was referenced in the post. There are other kinds of funds that do reasonably well; distressed credit shops seem to have done okay in the past few years, although that's starting to tail off now as there are more players in the market.
- valuearb 9y agoMoney is flowing in because they think they can pick the funds with true alpha, but they can't.