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> I’m not sure it was considered common sense when the bet was made. the academic research even back then was pretty evident that a market cap weighted index f
by chii 3y ago
> I’m not sure it was considered common sense when the bet was made.
the academic research even back then was pretty evident that a market cap weighted index fund has been outperforming hedge funds (over long periods like 10 yrs).
It's just that index funds way back, prior to vanguard, was not as easily accessible as it is today.
- bombcar 3y agoHedge funds are what their name says - they’re supposed to be a hedge for particular situations, not a main investment. But they became “cool” to own and talk about. Properly used, a hedge fund should just be a drag on your portfolio, but you have it because you’re hedging against risks that others don’t even bother with (like, say, total US collapse).
- dan-robertson 3y agoI think this is a misunderstanding of what a typical hedge fund is. The name comes from the fund hedging its own investments in potentially sophisticated ways. A simple to explain example is a long/short fund: by being good at shorting stocks that won’t go up so much, the fund is insulated from general market crashes (which make the shorts go up) the fund can get more leverage on their long positions. There do exist funds that only short (the best tends to lose a few % a year, iirc) and they would be invested in by other funds instead of picking stocks to short directly.