Why Hedge Funds are Just a Bad Deal…Unless You Are a Hedge Fund Manager

It’s shameful that Wall Street money managers in the hedge fund industry continue to defend their fee structures. Thanks to Barry Ritholz and his blog for this data. You can find the whole post here.


“Some of the data on fees is pretty astonishing. According to former JPMorgan Chase hedge fund seed investor author of “The Hedge Fund Mirage,” Simon Lack, this fee arrangement is effectively a wealth transfer from investors to managers.

• From 1998 to 2010, hedge fund managers earned $379 billion in fees. Their fund investors reaped only $70 billion in gains.

• Managers kept 84% of investment profits, while investors netted only 16%.

• Fund of funds/ feeders tack on yet another layer of fees, bringing the industry fee total to $440 billion — ~98%.”

Sadly not surprising. Let’s promise ourselves as investors to do better than this.

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