Hedge Funds

Maverick74 said:
Agree, but it's not mathematically realistic for 10,000 hedge funds to all have 150 billion that Ray Dalio has. The top 10% (around 1000 or so) have assets over 500 million. The top 1% (100) over 10 billion. Rough estimates. Most hedge funds are really more appropriately emerging manager funds. And as we all know, most of them don't perform and in the long run, most of them don't survive.
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It is all about the outliers.
 
Frederick Foresight said:
Who would entrust their money to a part-timer?
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It all depends on strategy-- and the rest of the ecosystem- most strats are automated today. Remember, we are not talking mom & pop when it comes to hedge fund investors. Some of these cats are in 100 plus funds.

But yeah, trust is tougher with a part timer growing assets.

surf
 
Sig said:
Rough life running a sub $25M fund, unless it's just you in your basement that's barely enough to cover costs.
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There was a Citigroup research paper a few years ago than an institutional fund can't survive on less than 300mm aum.

I think most funds fail because they can never raise enough capital to set up the infrastructure required to manage institutional money.
 
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newwurldmn said:
There was a Citigroup research paper a few years ago than an institutional fund can't survive on less than 300mm aum.

I think most funds fail because they can never raise enough capital to set up the infrastructure required to manage institutional money.
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There's plenty of money to be made from non-institutional sources.
 
sle said:
Not sure that's true. Traders should focus on markets with largest inefficiencies. Risk premium can be fairly priced, in which case you are not producing any alpha. IMHO
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They can be and usually are one and the same. Risk premia generates inefficiencies. For example, the put skew in the S&P 500 is a function of risk premia AND a market inefficiency. The puts are over valued by any statistical measure and the premia exists to attract liquidity and entice others to provide insurance to those looking to lay off risk at a price.

An even better example are options in the electricity market. The upside call skews in PJM are VERY pronounced. Very few people want to sell them because of the risk but the premia is wide enough to provide an incentive to enter the market. But yes, risk premia "can" be fairly priced i.e implied vol on GOOGL options going into earnings.
 
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