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

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51–60 of 130 posts

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

#51
post #49

Earlier quoted context omitted.

> private equity avoids reporting standards that are mandated for public companies? So do startups and small businesses. I’ve made money in both (as well as hedge funds). Good investments aren’t measured by consultant spam. I’d be furious if my managers burned my money on e.g. commissioning boiler plate risk factors.

private equities and startups/small businesses are fundamentally different in terms of the 'skin in the game' that startup founders and small business owners have in their business. They've typically invested themselves significant parts of their lives into their businesses. The same cannot be said of private equity funds, and you should know better.

> terms of the 'skin in the game' that startup founders

I’ve done a startup. My skin in the game was significant, but I was less dependent on the outcome of the startup than I was keeping my job earlier in my career.

In any case, fraudsters also have lots of skin in the game. This argument is irrelevant to the irrelevance of public reporting requirements, or the empirical track record of private equity for LPs.

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

#52
post #33

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

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.

> 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.

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

#53
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.

Well, not yet.

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

#54
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.

You are right about Social Security. It only holds Treasuries. But, there are many other pension funds like teachers pension, government workers pensions, etc that manage working class money.

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

#55
Shouldn't this problem self-regulate, though? Ultimately, investors mainly care about the returns and if you can get better returns elsewhere due to these fees, they will switch.

If they can charge large amount of fees and still stay competitive, then good on them, right?

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

#56
post #47
post #40

Earlier quoted context omitted.

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.

You probably gotta have some wild AI and Quant skills on your resume to get any sort of response.

I was trying to get into the more software-engineering side (e.g. stuff like what Jane Street advertises). I have plenty of experience at BigCo tech companies, but that doesn't appear to be enough.

I'm not bitter about it or anything, I'm not entitled to a yuppie finance job, but thus far no luck with it. There might be some magical configuration of my resume to make it stand out better to these companies, but I haven't found it yet if there is.

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

#57

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…

I always see this "excuse". Our fund isn't focused on alpha; we minimize beta. It's just unclear to me whether this is shown out in the data.

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

#58
post #22

It's nice to see that hedge funds are still around. I thought all the bros had switched to tech.

Aren’t hedge funds also tech companies these days? For example, isn’t the parent company of deep seek a hedge fund?

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

#59

Shouldn't this problem self-regulate, though? Ultimately, investors mainly care about the returns and if you can get better returns elsewhere due to these fees, they will switch. If they can charge large amount of fees and still stay competitive, then good on them, right?

Perhaps. But HF capital is usually locked down for a few years. So there is some friction to switching

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

#60

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

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.
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