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Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees

bloomberg.com

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Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees

#21

Post by bko »

mjfl wrote: post #17

As someone who has worked in the industry: hedge funds are certainly parasites on our society, who make money not from wealthy clients (as is widely thought) but by managing government money through the social security system, union pension funds, college endowments, and sovereign wealth funds. They are a tool to redistribute billions of dollars of ordinary people's money into the pockets of an 'in-group' that then u…

> by managing government money through the social security system, union pension funds, college endowments, and sovereign wealth funds

Why don't you target that anger and contempt to the organizations willfully giving money to these organizations?

"Social security system is a parasite on society, who steals taxpayers money and throws it away in inefficient vehicles evidence over decades that tells us that their investments aren't outperfoming index funds"

Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees

#23

Post by ldjkfkdsjnv »

mjfl wrote: post #17

As someone who has worked in the industry: hedge funds are certainly parasites on our society, who make money not from wealthy clients (as is widely thought) but by managing government money through the social security system, union pension funds, college endowments, and sovereign wealth funds. They are a tool to redistribute billions of dollars of ordinary people's money into the pockets of an 'in-group' that then u…

Yeah places like PIMCO are basically stealing from pension funds through a bunch of complicated financial engineering. Some of the assets they trade arent liquid, theres no consensus on fair price. And so a bunch of funny business goes on

Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees

#24

Post by bormaj »

mjfl wrote: post #17

As someone who has worked in the industry: hedge funds are certainly parasites on our society, who make money not from wealthy clients (as is widely thought) but by managing government money through the social security system, union pension funds, college endowments, and sovereign wealth funds. They are a tool to redistribute billions of dollars of ordinary people's money into the pockets of an 'in-group' that then u…

As someone else in the industry, is it fair to categorize all HFs this way?

Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees

#25

Post by jldugger »

mjfl wrote: post #17

As someone who has worked in the industry: hedge funds are certainly parasites on our society, who make money not from wealthy clients (as is widely thought) but by managing government money through the social security system, union pension funds, college endowments, and sovereign wealth funds. They are a tool to redistribute billions of dollars of ordinary people's money into the pockets of an 'in-group' that then u…

Wait, which part of the social security system is investing in hedge funds?

Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees

#26

Post by JumpCrisscross »

bko wrote: post #21
mjfl wrote: post #17

As someone who has worked in the industry: hedge funds are certainly parasites on our society, who make money not from wealthy clients (as is widely thought) but by managing government money through the social security system, union pension funds, college endowments, and sovereign wealth funds. They are a tool to redistribute billions of dollars of ordinary people's money into the pockets of an 'in-group' that then u…

> by managing government money through the social security system, union pension funds, college endowments, and sovereign wealth funds Why don't you target that anger and contempt to the organizations willfully giving money to these organizations? "Social security system is a parasite on society, who steals taxpayers money and throws it away in inefficient vehicles evidence over decades that tells us that their inves…

> Why don't you target that anger and contempt to the organizations willfully giving money to these organizations?

This happens from time to time. Most recently, in pensions withdrawing from private equity. It’s historically come to bite when these managers hit a bout of volatility. Put simply, portfolio theory is incredibly robust.

The question isn’t why hedge funds, but why does it keep paying so well?

Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees

#27

Post by stackskipton »

jldugger wrote: post #25
mjfl wrote: post #17

As someone who has worked in the industry: hedge funds are certainly parasites on our society, who make money not from wealthy clients (as is widely thought) but by managing government money through the social security system, union pension funds, college endowments, and sovereign wealth funds. They are a tool to redistribute billions of dollars of ordinary people's money into the pockets of an 'in-group' that then u…

Wait, which part of the social security system is investing in hedge funds?

US Social Security doesn't. Other countries may like Norway: https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...

Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees

#28

Post by mjfl »

namuol wrote: post #18
mjfl wrote: post #17

As someone who has worked in the industry: hedge funds are certainly parasites on our society, who make money not from wealthy clients (as is widely thought) but by managing government money through the social security system, union pension funds, college endowments, and sovereign wealth funds. They are a tool to redistribute billions of dollars of ordinary people's money into the pockets of an 'in-group' that then u…

Any advice to reform things? As individuals or as a collective?

(1) widespread education and awareness of this phenomenon, (2) put in restrictions on large institutions i.e. the government, unions, universities so that they only invest in funds with 'low-fee' structures and hire professional risk management at the institution-level that hedge risks using more standard methods like mixing bonds and equities and cash. Ban large institutions from investing in private equity, which is a high fee structure built to hide losses over long term periods.

Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees

#29

Post by JumpCrisscross »

mjfl wrote: post #17

As someone who has worked in the industry: hedge funds are certainly parasites on our society, who make money not from wealthy clients (as is widely thought) but by managing government money through the social security system, union pension funds, college endowments, and sovereign wealth funds. They are a tool to redistribute billions of dollars of ordinary people's money into the pockets of an 'in-group' that then u…

> managing government money through the social security system

Do you mean the social safety net? Social security does not invest in hedge funds.

Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees

#30

Post by mgfist »

bberenberg wrote: post #13
asdasdsddd wrote: post #4

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

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 ye…

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.

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