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.
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.
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?
Thanks - will tell my Grandma to invest because risk adjusted returns are better!
If grandma got at least a few millions, sure!
No. Stop it. Not this again
Do you prefer threads on?
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