Atlas Partners LLP reposted this
I’m a firm believer that hedge funds who provide a unique source of alpha are extremely valuable in a well constructed portfolio (the caveat being, there are very few such managers). And by “alpha” I do not mean excess returns - comparing their absolute performance to equities or a basic balanced portfolios misses the point. And while I have some sympathy with the simplistic argument that investors should only care about net returns (in principle I have issues) it is evident that the pass through fee structure is a destroyer of value overall … the only “alpha” that is persistent is comparatively lower fees. Add the fact that investors are locking up capital for extended periods means they are paying managers to take their money.