Has hedge funds time passed?

[Banjo]

This info is about a month old,
HF's:
12% of assets of MF's
40-50% of equities trading
70% of convert arb trading
30% of credit default swaps trading

 

[Corso482]

Quote from vulture:

IMO, that's a pretty large assumption on your part. In aggregate, you might be right, but there is no assurance that the particular fund one might have selected out of the 8000 or so out there, will stay affloat. BTW, I'm not endorsing mutual funds as any better alternative, I just believe that is near impossible to categorize the entire alternative fund industry in such black and white terms.

Well that's true, just like there's no assurance that your particular mutual fund will drop if we have another bear market. But if we are to speak about probabilities, on average, it's most likely in another bear market, your mutual fund will drop with the market, and it's most likely your hedge fund won't. In reality, though, there are always exceptions.

At any rate, generally speaking, I'm willing to pay for the greater probability that my money won't be subject to the capricious whims of the market, like it most probably would sitting in a mutual fund. That, IMO, is why people pay hedge funds more. It seems silly to pay large fees when the market is doing fine, but check most hedge funds when the market was taking a bath in '99 and suddenly those expenses don't look so bad.