rare is the hedge fund that doesn't charge a mgt fee. however, pressure is on to reduce the mgt fee to 0, in many funds. this may be the new standard one day..... surf
exactly. 50% performance fee on a fund with a PROVEN EDGE, is a great deal--investors will stand in line just to be given a chance to invest. the operative words are "proven edge". surf
The 0% fee funds are out there. They obviously are the ones who have confidence in their strategy. I do know of one who hasnt charged a fee since inception and has made their investors a ton of money over the years. Too many funds seem content to raise as much money as possible and just collect the 2%.
very true. asset gatherers is the term for those kind of funds--they are on the way out, in my opinion.
how would you know one has a 'proven edge'?track record is not sufficient. I thought Ospraie LLC was a great fund to invest. the guy was seeded by tudor jones and mentored by Julian R. had a good record of 8 years or so including a recession, yet he fell in love with his research and his plan in the case of a global recession was to go under. If the guy has a HUGE track record then chances are you need huge amounts to get in Picking hedge funds is like picking stocks in a market with huge commission costs, if you are good at that chances are you can do all the trading YOURSELF All that performance of hedge fund indexes are gone now that global assets are going down, why on earth would one pay 2/20 to be long of assets taking the risk of blowups?Cutten had a thread about a simple assets ETF type of portfolio, I bet something like that outperforms most hedge funds
It wasn't until I read Fooled By Randomness that it hit me bro. An overwhelming majority of consistently successful hedge funds were merely de facto short option premium. A carry trade-whether it's capturing currency yield differentials or borrowing at 2% and lending at 6%- is an identical risk profile to a short put on the spread. The "premium" collected is the yield diff. Leveraged of course. I used to look at returns and think, "how can these guys be so friggin' good". Now we all know it was Russian Roulette......