Index fund hedge fund
Investors do not need to take the risk or pay the HIGH fees of index funds. Hedge funds are a better and safer way of achieving ABSOLUTE returns with less volatility. They are also CHEAPER when you compare the quality and VALUE of the product.
What's wrong with index funds?
1. Buy stocks not because they are good investments but because a committee somewhere ACTIVELY decided they should be in an index
2. Sometimes wait decades to make any money - 5 years and counting in US/Europe, 15 years in Japan, 1965-1982, 1929-1954, 1905-1942...
3. Endure high risk, unacceptable volatility and severe drawdowns when clearly superior products are now available like good hedge funds
4. Do nothing to manage risk or preserve capital no matter what the economic climate
5. Are primarily to blame for the pensions underfunding crisis
6. Have wrecked individual investors retirement portfolios
7. Have outrageous fees. Charge .10% on $1 trillion and then claim that a hedge fund managing a much smaller amount charging 2% and 20% for true investment skill is a rip-off. Index fund fees are high compared to hedge fund fees. 0.10% on a $1 trillion is $1,000,000,000 in "management" fees EVERY year whether the clients win or lose. It is pure profit for NO skill. There are plenty of long only managers getting rich running closet index funds too.
In contrast take a large hedge fund with hundreds of skilled staff out of which compensation costs and a technological infrastructure has to be met. Interests are aligned with investors who make MUCH more. Either way for an alpha generating, well run, risk averse hedge fund, the fees are low compared to unskilled index funds. It is astonishing how "passive" products continue to receive positive coverage from academic economists and financial media considering their enormous risk and zero value.
Bottom line is that unhedged long only is too risky for conservative investors and hedge funds deliver better risk adjusted perforemance at a CHEAPER price.
What's wrong with index funds?
1. Buy stocks not because they are good investments but because a committee somewhere ACTIVELY decided they should be in an index
2. Sometimes wait decades to make any money - 5 years and counting in US/Europe, 15 years in Japan, 1965-1982, 1929-1954, 1905-1942...
3. Endure high risk, unacceptable volatility and severe drawdowns when clearly superior products are now available like good hedge funds
4. Do nothing to manage risk or preserve capital no matter what the economic climate
5. Are primarily to blame for the pensions underfunding crisis
6. Have wrecked individual investors retirement portfolios
7. Have outrageous fees. Charge .10% on $1 trillion and then claim that a hedge fund managing a much smaller amount charging 2% and 20% for true investment skill is a rip-off. Index fund fees are high compared to hedge fund fees. 0.10% on a $1 trillion is $1,000,000,000 in "management" fees EVERY year whether the clients win or lose. It is pure profit for NO skill. There are plenty of long only managers getting rich running closet index funds too.
In contrast take a large hedge fund with hundreds of skilled staff out of which compensation costs and a technological infrastructure has to be met. Interests are aligned with investors who make MUCH more. Either way for an alpha generating, well run, risk averse hedge fund, the fees are low compared to unskilled index funds. It is astonishing how "passive" products continue to receive positive coverage from academic economists and financial media considering their enormous risk and zero value.
Bottom line is that unhedged long only is too risky for conservative investors and hedge funds deliver better risk adjusted perforemance at a CHEAPER price.
© posted by Hedge Fund on 5:36 AM
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