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1. Crazy graph format lol 2. I thought management fees were supposed to pay for comp? 3. Buying SPY wins again? 4. I don't really care about rich people gett

1. Crazy graph format lol 2. I thought management fees were supposed to pay for comp? 3. Buying SPY wins again? 4. I don't really care about rich people getting ripped off, but I wonder if any of my money leaks into these funds

fallingknife 2y ago
I've seen plenty of attempts at cramming down multidimensional data into less dimensions, but this is the first time I've ever seen the opposite!
frenchtoast8 2y ago
Does this graph format have a name? Google isn’t turning up anything for me.
- Terr_ 2y ago
  Resembles an unhelpfully simple https://www.amcharts.com/voronoi-treemap/ https://www.amcharts.com/voronoi-treemap/
  - roryokane 2y ago
    Yeah, I was about to post that it looked like some hybrid of a voronoi diagram and a treemap. More about those diagram types that can be combined in this manner: https://en.wikipedia.org/wiki/Voronoi_diagram https://en.wikipedia.org/wiki/Voronoi_diagram https://en.wikipedia.org/wiki/Treemapping https://en.wikipedia.org/wiki/Treemapping
bberenberg 2y ago
I think you need to consider time horizons when analyzing these funds. You can buy SPY and it will win. Unless there is a market crash when you hit retirement age, in which case you are screwed until the market recovers. If you don't mind the risk, go 2x levered and you will do even better. [0] Many institutions and HNW and UHNW individuals prioritize consistency over absolute growth. They would rather make 6-8% a year and reduce downside risk than optimize for gains. Multi-strat funds like this one are catering to people who want that product. [0] - https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&doi=766305a669c45afbac4b833025529e84ced4a025 https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&d...
- mgfist 2y ago
  2x leaves at the mercy of margin calls, which inconveniently come at the moment where you least want to sell (right after a huge crash). Getting margin called after a 50% crashes leaves you with $0, as an example. A 50% market crash would be brutal even without leverage, but at least no one would force you to sell.
  - unyttigfjelltol 2y ago
    ... "permanently high plateau" and all that...
  - cj 2y ago
    You can achieve 2x leverage without the risk of margin calls by buying ETFs like SPUU (or SPXL, UPRO if you want 3x leverage).
    - casercaramel144 2y ago
      That's a really bad idea, those rebalance daily, so you are basically betting against short-term volatility (if spy goes down 10% in a day then up 10% the next, you are down 1% on spy, on a 2x levered etf you are down 4% or 4x the loss). Also both fees and slippage are really terrible on all levered ETFs If you really want to do 2x lever its probably best to just buy 6 month or 1 yr dated ITM calls. They're quite cheap and very liquid on SPY.
      - arcticbull 2y ago
        And yet UPRO (3X SPY) has significantly outperformed 3X the S&P 500 since inception (since June 2009 UPRO is +8000% vs SPY +700%. The reason is exactly what you described actually. If the underlying exhibits positive momentum, generally trending up instead of oscillating back and forth, the daily balancing works for you instead of against you and the ETF outperforms the target multiple of the underlying. Yes, if your S&P returns over 3 days are +10%, -10%, +10% then SPY is up 8.9% while UPRO is up 18% (2X, not 3X). On the other hand if your S&P returns over 3 days are +10%, +10%, +10% then SPY is up 33% while UPRO is up 120% (4X, not 3X). The big levered ETFs have reasonable volume and limited slippage for any volume retail investors would be trading. Fees are like 0.9% which all things considered isn't bad - given their vast outperformance. I'm not saying go all in on these, what I'm saying is that your analysis of the levered funds is missing some important details which show up on a quick backtest. If you understand the products and what bet you're making with them, they can be quite reasonable to hold long term - despite popular misconceptions. > If you really want to do 2x lever its probably best to just buy 6 month or 1 yr dated ITM calls. They're quite cheap and very liquid on SPY. Respectfully those are much more expensive and if you're near the money quite non-linear. You're going to have to pony up pretty close to the price of just buying the index again to get 2X exposure if you're deep ITM. Near the money you'll need several options to get 2X - and you'll need to delta rebalance. You'll also get eaten alive by theta decay. To avoid having to pony up a ton of collateral or get eaten by theta, you may as well just buy more SPY on margin - or save yourself the hassle and get an /ES=F or /MES=F. If you insist on trying to trade the S&P 500 with options (especially if your expiration is only 6-12m away) use SPX or XSP -- not SPY. They're cash-settled European index options, so no early exercise to worry about, no dividends to worry about and they get 60/40 capital gains treatment no matter how long you hold them for.
barbarr 2y ago
Ok so in defense of their voronoi graphs, if they used a segmented bar or pie chart instead, you wouldn't be able to see the small quantities clearly, and if they used circles of different sizes, it would be easy to mistake the radii as the measured quantity instead of the area. Similar issue arises with lengths/widths if you use rectangles. Their visualization nudges you to compare areas which is a good feature imo.
- airstrike 2y ago
  Just put regular columns next to each other.
- fn-mote 2y ago
  > it would be easy to mistake the radii as the measured quantity instead of the area Humans perceive the area as the measured quantity even when radius is the intended, so this isn’t going to be a problem.
- thaumasiotes 2y ago
  > and if they used circles of different sizes, it would be easy to mistake the radii as the measured quantity instead of the area No, if the measured quantity is represented as the radius, everyone will assume it's the area, and you've designed a very bad graph. If the measured quantity is represented as the area, everyone will assume it's the area, and you're fine. The area is what you can see.
IncreasePosts 2y ago
Hedge funds aren't necessarily about getting max gains - they can be about decorrelating some of your investments (hence the hedge). So maybe buying SPY would have worked , but people with their money in hedge funds probably already have a bunch of investments correlated with SPY.
- Terr_ 2y ago
  > they can be about decorrelating some of your investments (hence the hedge). As a tangential caution to readers: Remember that where you work is something you want to diversify for: Put a bit more into things that won't go bust around the same times you lose your job.
- clove 2y ago
  That's no longer true and hasn't been for a long time. While the name comes from that concept, the "hedge fund" is now just any fund marketed to accredited investors.

fallingknife 2y ago

I've seen plenty of attempts at cramming down multidimensional data into less dimensions, but this is the first time I've ever seen the opposite!

frenchtoast8 2y ago

Does this graph format have a name? Google isn’t turning up anything for me.

Terr_ 2y ago
Resembles an unhelpfully simple https://www.amcharts.com/voronoi-treemap/ https://www.amcharts.com/voronoi-treemap/
- roryokane 2y ago
  Yeah, I was about to post that it looked like some hybrid of a voronoi diagram and a treemap. More about those diagram types that can be combined in this manner: https://en.wikipedia.org/wiki/Voronoi_diagram https://en.wikipedia.org/wiki/Voronoi_diagram https://en.wikipedia.org/wiki/Treemapping https://en.wikipedia.org/wiki/Treemapping

bberenberg 2y ago

I think you need to consider time horizons when analyzing these funds. You can buy SPY and it will win. Unless there is a market crash when you hit retirement age, in which case you are screwed until the market recovers. If you don't mind the risk, go 2x levered and you will do even better. [0] Many institutions and HNW and UHNW individuals prioritize consistency over absolute growth. They would rather make 6-8% a year and reduce downside risk than optimize for gains. Multi-strat funds like this one are catering to people who want that product. [0] - https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&doi=766305a669c45afbac4b833025529e84ced4a025 https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&d...

mgfist 2y ago
2x leaves at the mercy of margin calls, which inconveniently come at the moment where you least want to sell (right after a huge crash). Getting margin called after a 50% crashes leaves you with $0, as an example. A 50% market crash would be brutal even without leverage, but at least no one would force you to sell.
- unyttigfjelltol 2y ago
  ... "permanently high plateau" and all that...
- cj 2y ago
  You can achieve 2x leverage without the risk of margin calls by buying ETFs like SPUU (or SPXL, UPRO if you want 3x leverage).
  - casercaramel144 2y ago
    That's a really bad idea, those rebalance daily, so you are basically betting against short-term volatility (if spy goes down 10% in a day then up 10% the next, you are down 1% on spy, on a 2x levered etf you are down 4% or 4x the loss). Also both fees and slippage are really terrible on all levered ETFs If you really want to do 2x lever its probably best to just buy 6 month or 1 yr dated ITM calls. They're quite cheap and very liquid on SPY.
    - arcticbull 2y ago
      And yet UPRO (3X SPY) has significantly outperformed 3X the S&P 500 since inception (since June 2009 UPRO is +8000% vs SPY +700%. The reason is exactly what you described actually. If the underlying exhibits positive momentum, generally trending up instead of oscillating back and forth, the daily balancing works for you instead of against you and the ETF outperforms the target multiple of the underlying. Yes, if your S&P returns over 3 days are +10%, -10%, +10% then SPY is up 8.9% while UPRO is up 18% (2X, not 3X). On the other hand if your S&P returns over 3 days are +10%, +10%, +10% then SPY is up 33% while UPRO is up 120% (4X, not 3X). The big levered ETFs have reasonable volume and limited slippage for any volume retail investors would be trading. Fees are like 0.9% which all things considered isn't bad - given their vast outperformance. I'm not saying go all in on these, what I'm saying is that your analysis of the levered funds is missing some important details which show up on a quick backtest. If you understand the products and what bet you're making with them, they can be quite reasonable to hold long term - despite popular misconceptions. > If you really want to do 2x lever its probably best to just buy 6 month or 1 yr dated ITM calls. They're quite cheap and very liquid on SPY. Respectfully those are much more expensive and if you're near the money quite non-linear. You're going to have to pony up pretty close to the price of just buying the index again to get 2X exposure if you're deep ITM. Near the money you'll need several options to get 2X - and you'll need to delta rebalance. You'll also get eaten alive by theta decay. To avoid having to pony up a ton of collateral or get eaten by theta, you may as well just buy more SPY on margin - or save yourself the hassle and get an /ES=F or /MES=F. If you insist on trying to trade the S&P 500 with options (especially if your expiration is only 6-12m away) use SPX or XSP -- not SPY. They're cash-settled European index options, so no early exercise to worry about, no dividends to worry about and they get 60/40 capital gains treatment no matter how long you hold them for.

barbarr 2y ago

Ok so in defense of their voronoi graphs, if they used a segmented bar or pie chart instead, you wouldn't be able to see the small quantities clearly, and if they used circles of different sizes, it would be easy to mistake the radii as the measured quantity instead of the area. Similar issue arises with lengths/widths if you use rectangles. Their visualization nudges you to compare areas which is a good feature imo.

airstrike 2y ago
Just put regular columns next to each other.
fn-mote 2y ago
> it would be easy to mistake the radii as the measured quantity instead of the area Humans perceive the area as the measured quantity even when radius is the intended, so this isn’t going to be a problem.
thaumasiotes 2y ago
> and if they used circles of different sizes, it would be easy to mistake the radii as the measured quantity instead of the area No, if the measured quantity is represented as the radius, everyone will assume it's the area, and you've designed a very bad graph. If the measured quantity is represented as the area, everyone will assume it's the area, and you're fine. The area is what you can see.

IncreasePosts 2y ago

Hedge funds aren't necessarily about getting max gains - they can be about decorrelating some of your investments (hence the hedge). So maybe buying SPY would have worked , but people with their money in hedge funds probably already have a bunch of investments correlated with SPY.

Terr_ 2y ago
> they can be about decorrelating some of your investments (hence the hedge). As a tangential caution to readers: Remember that where you work is something you want to diversify for: Put a bit more into things that won't go bust around the same times you lose your job.
clove 2y ago
That's no longer true and hasn't been for a long time. While the name comes from that concept, the "hedge fund" is now just any fund marketed to accredited investors.