This week on our Masters in Business radio podcast, we speak with Simon Lack of SL Advisors, and author of The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True. Lack previously sat on JPMorgan’s investment committee, allocating over $1 billion to hedge fund managers. He founded the JPMorgan Incubator Funds, two private equity vehicles that took economic stakes in emerging hedge fund managers.
We discuss the challenges of finding those rare managers who generate alpha. Lack’s experience seeding hedge funds for JPMorgan has left him with the conclusion that being a general partner with most hedge funds is much more lucrative than being a limited partner (i.e., investor).
Lack places the blame for poor hedge fund performance squarely on the investor class — noting that these are not mom and pop investors putting $10,000 into an ETF, but very sophisticated institutional investors deploying billions of dollars on behalf of pensions, endowments, and family offices. A consistent lack of knowledge exists among these investors, and an excessive willingness to chase last year’s hot fund is a regular problem.
All of the books discussed can be found here.
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Next week, we speak with Yuval Noah Harari, author of Sapiens: A Brief History of Humankind, and Homo Deus: A Brief History of Tomorrow.