I have first hand knowledge of a relatively new hedge fund of funds outfit with a most unexciting track record but with dynamic and motivated managers with a love of networking raising very considerable sums of money. Of course oustanding performance is a great bonus. But it is certainly not necessary to success in asset gathering. #################################### No demand for perfomance . In most of the case great perfomance related to great risk . Great perfomance with small risk is more rare case. With 4% perfomance(goverment bond) HF CEO payement = 350 mln $ per year (10-20 time's higher as by CEO of different industries behemot's) Asset gathering is most important task
The problem is the broad public can't invest in hedge funds because the generally undercapitalized broad public is hardly the target audience hedge funds seek. Plus a large number of funds regularly stop taking new money. Few professional money managers get substantial fund commitments because of their "personality" or "marketing skills". The large majority of them have to build year-long track records with their own and friends-and-family capital before getting any serious third party capital. And those are gone through redemptions as fast as they came in once performance doesn't mirror the initial track record. It's amazing I hear see so much sh** thrown at hedge funds when the real rip off artists are mutual funds and the big public banks pumping them to their dentist retail clients. Many many mututal funds charge between 1.2-2.5% in annual fees, rarely outperform their benchmark indices and unlike hedge funds provide zero diversification in a stock portfolio. Why is nobody whining about the mutual fund scam artists but people love to whine about the Hedge Funds? What is it? Jealousy? The "Oh I could do so much better if I ran my own fund!" sympton? Strange
Could you please provide a list of hedge fund managers that returned an average of 4% over the last five years to their clients while at the same time making $350m annual on average? I have a feeling the list will come out empty.
My point is about fund raising in general not about hedge funds in particular. Yes, of course I agree with what you say (about needing a couple of years track record with money of your own or from people known to you) but do not forget that many successful launches are by professionals with experience and some sort of record. In the case of the FoF I was talking about, the partners put in their own capital plus serious money from a backer who knew them in their past lives. I wholeheartedly agree that the mutual fund industry is an absurb rip off: I would rather be a buyer of an index tracker any day. You may or may not be familiar with the UK Unit Trust industry. If you are, you will know that retail are charged anything up to a 5% entry fee and that the bid offered spread can amount to an incredible 7%. No one doubts the need to sustain performance of a sort to retain investors. Look at the JW Henry / Merrill story this week. But performance need only be very mediocre to prevent investors rushing for the door. You need only take a look at some of the products on offer. For some, a mediocre performance coupled with a big name bank or fund manager gives a warm feeling of security.
makloda ) -------------------------------------------------------------------------------- Could you please provide a list of hedge fund managers that returned an average of 4% over the last five years to their clients while at the same time making $350m annual on average? I have a feeling the list will come out empty. Can not be . 2% is lowest management fees in industries + lowest 20% from profit . A lot of manager taked 5% +44% Simonis(not only ) earned more as 1.5 bil $ per year with perfomance before fee some 30% for investor ( - tax after) If fund have 1 bil $ ,won 10% perfomance per year and have lowest fees ,CEO payement would atleast 20- 25 mln $ (if 2% from start payement would used only to cover expense ,which are essentialy lower ) By equal perfomance with 5% +44% fees struktur - atleast (!) 45-50 mln $ for CEO You can read Alpha trading in library ,search fund capitalization and calculate Simonis perfomance 30% for multiple bil $ dubbed as star .That is very good for this capital value ,but investor after fees and tax would not receive any good appreciation . ------------------------------------------------ Author point of view that very good result for 100k $ investor 40 % per year after fees ,that can make Minervini -contact he's side)
LMAO Ok right, not very good at all. In fact, Medallion is a joke and "Simonis" is a fraud ##################################### Is not . HF calculated very well .Not forbidden from law through adv/promoution to implement false ideja in head's of mass public . ( Low quality perfomance ,but not fraud) Simonis gave to broadly mass to end average result ,not loss . Broad mass gave for Simonis(and anothers) extrem high payement . Suspect that alsov for USA top consum standart 50 mln $ payement per year is good . Make HF company offshore , gather asset 2 bil$ - through adv. as -"... Very stable ,secure ,goverment controlled ... " ,ivenst direct to USA goverment debt ( with lowest risk) and 40- 50 mln $ payement per year for founder is secured. Must not make risk as Simonis ... Enough
ananda My point is about fund raising in general not about hedge funds in particular. Yes, of course I agree with what you say (about needing a couple of years track record with money of your own or from people known to you) but do not forget that many successful launches are by professionals with experience and some sort of record. ###################################### as example - Fund founder was SP by Goldman or MD by Morgan Stanley. But independent ,how good he was ,he need not high fund perfomance as without any perfomance fund founder payement would 10 time's higher as Senior Partner by Goldman (5 mln $) No risk , no motive to make risk ,no stress ... Enough Merryl Lynch research stated that HF perfomance in most of the case equal to SPY . Payement to CEO/Founder is not equal in comparsion to MER MD http://www.forbes.com/2007/05/30/ri...forbeslife-cx_mw_0531rich.html?partner=alerts
The same people... That were selling you worthless gold stocks 20 years ago... Are selling you worthless "hedge funds" today. Except the con today... Is easier and more respectable. Human nature never changes... In fact, today's pop culture virtually eliminates critical analysis. 100 years ago... "There's a sucker born every minute"... Today... "There's 10 suckers born every minute". ET is absolute proof of the above.