Hedge funds are entirely voluntary transactions on the part of participants.
Doesn't mean said participants can't get together and complain about it to try and improve market liquidity
Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
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Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#82Surely 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?
Yes and what would be its job? Making sure that rich people have lawyers who read contracts? That would probably suffice. I don't have much sympathy for people who have enough money to use hedge funds and complain about the terms of their completely voluntary transaction.
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#83Shouldn'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?
Depends on if there’s capital gains tax when leaving the firm.
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#84Slow news day Bloomberg? Seriously, if you're investing in ANYTHING, and don't understand the prospectus or won't hire people to understand it for you, you're a fool.
They can charge whatever they want on these "pass-throughs".
The industry, just like post-return-management-clawbacks in the Tiger era (see Mallaby's "More Money Than God" https://amzn.com/dp/B003SNJZ3Y ) can get away with this precisely ONCE before "normalization" (as much as it's ever normalized) kicks in and these practices obviated.
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#85Earlier quoted context omitted.
I was wrong about the social security system, which I must have gotten confused with some kind of pension system, like CALPERs, which used to invest in hedge funds before pulling out in 2014, but still allocates 40% of its portfolio into private equity [1], which may be worse than hedge funds for reasons I have discussed elsewhere. Everything else I said was true. > Don’t want one, invest elsewhere. Ordinary people h…
> which may be worse than hedge funds PE obtains higher returns than public funds simply because they have more options to invest in. They can put the cash into anything public invested funds can choose, AND a massive range of other projects. CalPERS is not an ignorant investor. They see the results, and they allocate accordingly. From your own link : "Over the past ten years, private equity has delivered an annualiz…
I would argue the CalPERs does not know the return of its private equity investments because private equity is a recent phenomenon and one that locks up funds for 4-7 years, and I would predict that its realized returns will be disappointing. The financial literature is a crapshoot filled with selection bias that I wouldn't consult for anything. Rather, I will rely on my personal experience which is: private equity is a racket.
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#86It'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.
They are more pedigree focused
But cold applying isn't in vogue anyway
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#87Earlier quoted context omitted.
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.
and is irrelevant in general since its just been nuked from orbit
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#88Earlier 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 don’t think it has to be that crazy. I only have a Bachelors in CS.
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#89As 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…
I’ve been satisfied with the hedge fund I was in
They didn't just do common stock equity trades, they sliced and diced money flows into and out of companies so interestingly
It felt like I had employed people to find, and create, deal flow
In bear markets theyd find companies that VCs all passed over, and created a pivot for them and extremely favorable capital terms to the hedge fund such as revenue splits before it hits the company’s books
When people say parasites, I see transactions that would never have happened
I see transactions I would never be able to get into the room to negotiate to happens
I also see how nobody knows anything. People see hedge fund movements in equity positions, but they wont see revenue splits, inventory splits for the fund to sell themselves
Its all about what you/your fund specifically does
Re: Hedge Funds Are Pocketing Much of Their Clients' Gains with 'No Limit' Fees
#90Earlier quoted context omitted.
You just aren't as special or interesting as you think to them. Think about this, there are many finance focused graduates with several years of experience in that industry (buy-side im presuming from your comment) and being able to code isn't as special as SWE think it is. This is another case of software devs thinking they can crack finance/trading because they know how to code. The myopia comes from the difference…
I don't really think I'm terribly special. As I said in sibling comments, I have been trying to break into more of the software side, not the quant stuff. I don't think I need to be special in order to try to break in, as long as I set my expectations to "it's a long shot" mode. I do think that I could learn any level of quant if I really wanted to, but I would rather focus on the software stuff. I have about half of…
> I have been trying to break into more of the software side, not the quant stuff
> I have about half of a PhD in theoretical computer science
There just aren't that many jobs in High Finance.
They can concentrate on hiring EECS/ECE/CS majors from MIT, Harvard, Stanford, UC Berkeley, UIUC, Columbia, and Princeton and call it a day.
But more critically, why would you even want to make that move? The RoI isn't that high if you aren't quant. You can make decently well working in most tech companies with a better WLB.