MAKE MONEY WHILE YOU ARE ASLEEP
POWER OF COMPOUNDING, RULE 72: MONEY DOUBLES EVERY ....YRS = 72/ RATE OF INTEREST
Don't pay high fees to fund managers.
buy index funds: minimal management fees.
Costs skyrocket when large annual fees, large performance fees, and active trading costs are all added to the active investor’s equation. Funds of hedge funds accentuate this cost problem because their fees are superimposed on the large fees charged by the hedge funds in which the funds of funds are invested.
A number of smart people are involved in running hedge funds. But to a great extent their efforts are self-neutralizing, and their IQ will not overcome the costs they impose on investors. Investors, on average and over time, will do better with a low-cost index fund than with a group of funds of funds.
“75% drop in the assets of pure Fundamental Long-Short Equity Hedge Funds by September 2019. These assets will transition to quantimental investing, smart beta products, statistical arbitrage funds, long only concentrated funds, event driven funds, etc”
PREDICTOR
Anirudh Chowdhry
CHALLENGER
Unchallenged
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Anirudh Chowdhry
CHALLENGER
Unchallenged
Voting has been temporarily disabled.
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Chowdhry's Argument
Significant underperformance of long-short hedge funds relative to the indices over the last three years
No changes in the fee structure of long –short managers despite this underperformance
Availability of alternative products ( smart beta, risk premia harvesting, hedge fund replication strategies, ETFs) providing similar return stream at a lower fees
Proliferation of passive investment products increasing correlations and tempering the impact of diversification across securities
Burgeoning susceptibility of equities to macro-based news relative to firm-specific news
Technology evolution increasing the efficiency of financial markets to process information-truncating the potency of fundamental and ubiquitous variables (like changes in dividends) to forecast the intrinsic value of an asset
Growing realization among institutional investors that underwhelming performance triggers replacement of hedge fund managers
Significant underperformance of long-short hedge funds relative to the indices over the last three years
No changes in the fee structure of long –short managers despite this underperformance
Availability of alternative products ( smart beta, risk premia harvesting, hedge fund replication strategies, ETFs) providing similar return stream at a lower fees
Proliferation of passive investment products increasing correlations and tempering the impact of diversification across securities
Burgeoning susceptibility of equities to macro-based news relative to firm-specific news
Technology evolution increasing the efficiency of financial markets to process information-truncating the potency of fundamental and ubiquitous variables (like changes in dividends) to forecast the intrinsic value of an asset
Growing realization among institutional investors that underwhelming performance triggers replacement of hedge fund managers
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