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They didn't get the money by performing well. They do it by convincing people that they performing well. Even thought that 98% will not outperform a basic cheap
by xorfish 7y ago
They didn't get the money by performing well. They do it by convincing people that they performing well. Even thought that 98% will not outperform a basic cheaper index fund with skill.
- pnako 7y agoThat's a bit of a meme. Not entirely wrong. But the people who have hedge fund money know how to read the fine print about returns. The goal of hedge fund is to reduce volatility and/or to generate uncorrelated returns. Some people are ready to pay a premium for that (in the form of under-performance compared to an index). Hedge funds are more an alternative to fixed income than an alternative to equities, if you think about it.
- tomatocracy 7y agoI think the key part you missed is that the statistics of this sort are usually quoted net of fees (which makes sense from the perspective of the investor). So it's evidence that fund managers take an unequal share of their outperformance, not that they don't outperform the market/benchmark (of course, not all do that either).
- xorfish 7y agoMeasuring the performance of hedge funds is quite difficult. You have to account for survival bias, reporting bias and hidden risk.