6 Reasons to Avoid Hedge Funds (aka "Pros") https://blogs.cfainstitute.org/investor/2025/03/13/6-reasons-to-avoid-hedge-funds/
I can find many articles to invest in hedge funds. You don't understand arithmetic. Do you think holding SPY long term is better than Bershire or Citadel wellington or Renaissance or any hedge fund that's been around for a while?
one: you can’t invest in citadel or renaissance unless you are uber wealthy. Second, the returns of citadel are massively skewed to the early years when arbitrage returns were easier to obtain and AUM’s were smaller. Which startup funds would you invest in today? three, you picked the two most successful funds and the most successful stock picker ex-post. It’s only fair to compare that to the most successful individual stocks. four: if you did invest in said stocks (most successful from #3) or even an index fund, you don’t pay capital gains until you sell. With these funds (except berkshire) you will pay short term gains every year. So they have to outperform by almost 40percent more to break even to the buy and hold benchmark each year. Of course at the end of it, you have to pay long term capital gains on the stock portfolio. but if you die, your heirs do not. They get a step up in the basis, with the fund the taxes will have already been paid and create a drag on earnings. (Doesn’t apply to Berkshire) five: beekshire isn’t a hedgefund. It’s a conglomerate that happens to own some stocks. The private side of Berkshire is very large. Berkshire doesn’t charge fees (which is where most of the performance drag in hedg funds resides). Finally Berkshire’s performance isn’t just driven by stock trading, but by real world operating earnings and a multiple on those earnings. Berkshire is closer to an ever green private equity fund with a broad based stock index wrapped in a public equity.
You don't understand Hedge Funds. There are 100's of them. Ren, Cita & Wellington are the cream of the crop. The vast majority live off of (before they close, eventually) management fees, not their performance.
I think I know hedge funds, market making, and hft. Any hedge fund that's been around for a while is better than an index
From Copilot Hedge funds often struggle to consistently outperform the SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500 index. While some hedge funds do beat the market in certain years, studies show that most hedge funds underperform the S&P 500 over the long term. One reason is that hedge funds typically charge high fees (often 2% management fee + 20% of profits), which can eat into returns. Additionally, hedge funds use complex strategies that aim to reduce risk rather than simply maximize returns, meaning they may not always match the strong gains of SPY.
Well then he is not considering, all the rest he hasn't worked for. James, Jordan, Bryant, Bird, Magic are not like all other NBA players either.
All the more reason he should be aware most others, over time, way underperform the group - as well as against major indices.