Why do people invest in hedge funds?
Excuse me if I sound obtuse, but for investors if you have a higher likelihood of achieving a greater 5-10 year return with a passive SP500 etf vs. investing in a HF , why would one choose the latter? I understand that there are outliers in the HF space that produce phenomenal / market beating returns, (renaissance, greenlight etc.), so I could understand allocations to these.
Comments ( 7 )
HF is in the business of producing RISK-ADJUSTED RETURNS because it can go long and short, not about beating some benchmark .
That's why their performance fee is based on the absolute dollar of profit they can generate each year, not on the difference between what they generate and SP500 return.
My YouTube Channel
My Career Newsletter
Oh ok - thanks I did not realize the risk adjusted returns were higher for hedge funds.
Are there any hedge funds in existence that are gunning for highest absolute returns instead of highest risk adjusted returns?
Tiger Global ?
My YouTube Channel
My Career Newsletter
No. Stop it. Not this again
300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.
Learn moreDo you prefer threads on?
My YouTube Channel
My Career Newsletter
Sunt similique voluptate sed odit culpa. Et qui porro quia et. Fuga qui dolorem veritatis consequuntur consequatur aliquam dignissimos. Esse voluptas sed sed quas at provident nihil itaque.
Distinctio voluptatum est explicabo sunt aperiam est quis nam. Praesentium eligendi sit repudiandae ut autem ut maiores. Fuga tenetur recusandae eum facilis rerum repudiandae. Dolores magnam quo illum sit quae.
Voluptas rerum molestiae cumque minus vero. Minus aut eligendi dicta magnam.
Explicabo voluptas eum non animi facere et. Ut voluptatibus veniam cumque consequuntur impedit ipsum qui. Totam sed blanditiis accusantium quaerat illum cumque qui. Assumenda molestiae quos quia quis aut et. Alias amet iste ut id quasi ipsam deserunt.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...