10 Hedge Fund Myths

Nice work by WealthManagement looking at the usual misinformation about hedge funds. Its a shame its in (horrific) slide show format.

Let me save you 10 clicks or so:

10 Hedge Fund Myths
1.  Hedge funds are absolute-return vehicles.
2.  Hedge funds are nimble market-timers.
3.  Shorting generates alpha.
4.  Today’s stars will be tomorrow’s also.
5.  Hedge funds shine in volatile markets.
6.  Replication doesn’t work.
7.  Only net-of-fee returns matter.
8.  Stock selection drives performance.
9.  Hedge funds are long value stocks and short growth.
10.  Fee structure of 2/20 aligns incentives.

These are all throughly proven myths about the “average” hedge fund.  No, they don’t apply to all funds, but certainly to many.

If you want a deeper dive into criticism of hedge funds, I strongly suggest Simon Lack’s book, The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True.


Source: WealthManagement.com