Stellar Past Performance Is a Good Measure of Investment SkillEvery year, another fund manager is anointed as the “next investment guru” based on his recent past performance. It’s more likely he was just lucky rather than skillful. It can take a very long period of time (often 20 years or more) to determine whether the performance of a fund manager was luck instead of skill. Relatively few fund managers stick around that long.
If Only I Qualified for a Hedge Fund Investment
Be thankful you don’t. If you do, avoid the temptation. In his new book, The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True, Simon Lack concludes that hedge fund investors as a group would have been better off if they had simply invested in Treasury Bills. Lack bases his conclusion on publicly available data from Hedge Fund Research, Inc. Hedge funds are great investments for those who run successful ones, because of the excessive fees they charge: commonly 2 percent of assets and 20 percent of profits. This fee structure motivates them to take very high risks… with your money!
Investors are continually looking for the right answer to one question. Where is the best place to invest my money? There is no answer with regard to which asset class or fund manager. The real question should be what strategy will help me reach my goal.
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- Former Edmond resident, hedge fund manager draws more prison time for money laundering (newsok.com)
- Why hedge funds are a joke (csmonitor.com)