Surely there isn't a shortage of competition? Does everyone just want in on the big names?
Yeah, I'm not sure who is being scammed. Myself, I have never heard of any of these — Citadel, etc.
Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
31–40 of 130 posts
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#32Surely there isn't a shortage of competition? Does everyone just want in on the big names?
Old people who don't watch their assets, very rich people who don't watch their assets. Maybe we should build a protection mechanism for it - maybe call it the Consumer Finance Protection Bureau?
CFPB is irrelevant for hedge fund LPs.
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#331. 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
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.
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#34Surely there isn't a shortage of competition? Does everyone just want in on the big names?
> Does everyone just want in on the big names?
Yes. Generating consistent returns is hard. Proving you can do it is harder. Investors may be rationally willing to cede most of the upside in exchange for less exposure to the downside. (Part of the problem is the political pressure on public fund managers to avoid losses.)
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#35Earlier quoted context omitted.
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.
... "permanently high plateau" and all that...
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#36Earlier quoted context omitted.
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 i…
I have invested in hedge funds as an individual. Your proposals would be great for me; less competition. I’m sceptical of the public benefits, though there is absolutely a political bloc who will like the optics of banning public investments in HFs and PE.
> private equity, which is a high fee structure built to hide losses over long term periods
Empirically false.
The problem with PE is the same as HFs: fees and dispersion of outcomes.
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#371. 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
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.
Just put regular columns next to each other.
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#38Earlier quoted context omitted.
(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 i…
I have invested in hedge funds as an individual. Your proposals would be great for me; less competition. I’m sceptical of the public benefits, though there is absolutely a political bloc who will like the optics of banning public investments in HFs and PE. > private equity, which is a high fee structure built to hide losses over long term periods Empirically false. The problem with PE is the same as HFs: fees and dis…
by all means, keep letting those charlatans take your money.
Are you denying that private equity avoids reporting standards that are mandated for public companies?
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#39Earlier quoted context omitted.
> 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?
Why can hedge funds negotiate such high fees despite lackluster performance?
You answered it in the prior sentence: portfolio theory is incredibly robust. They (claim) to provide diversified return. The idea is that although they may not provide a net return comparable to low cost equity ETFs, they provide diversified return. And portfolio theory tells us lower yielding assets can actually increase your portfolio's risk-adjusted return, as long as it's not perfectly correlated with your existing investments.
Whether this plays out in practice is a different story, but that's the idea and selling point.
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#40It's nice to see that hedge funds are still around. I thought all the bros had switched to tech.
I've tried for the last several years to go the other direction: tech -> finance. I've sent thousands of applications to hundreds of trading and finance companies, and gotten zero bites in the last two years.
I am currently just assuming that there aren't as many finance jobs as there are jobs at big tech.