Who is running these hedge funds – communists?

[thenews]

They’re certainly redistributing a lot of the wealth of the 1%

I have alarming news. America’s wealthy, the so-called 1%, continue to underestimate the full scale of the communist conspiracy attacking our country.

While the 1% are distracted by panic and alarm about Barack Obama and Elizabeth Warren and “Pajama Boy,” the real Red Menace continues to grow, completely unsuspected, from its secret base of operations.

I don’t mean Washington, D.C.

I don’t mean Moscow.

And I don’t mean China or North Korea either.

I’m talking about Wall Street.

No one, and I mean no one, is doing more to take money from the wealthy owners of capital and transfer it to the pockets of “labor” (broadly defined). No one does more to fleece the 1%. Onwards, comrades! Aux barricades!

The latest evidence comes courtesy of eVestment, a financial research company, which maintains one of the leading databases on the performance of hedge funds—those exclusive high-hat funds that manage the money of the super-rich.

The firm has just published news about how hedge funds treated their wealthy clients in 2013, and it’s a doozy.

The average fund left its wealthy investors with a return of 9.2% in 2013, according to eVestment.

Over the same period a simple investment in a Standard & Poor’s 500 index fund instead would have earned them…28%

In other words, hedge funds, in return for their top-of-the-market fees—typically, 2% of assets plus 20% of any profits—delivered bottom-of-the-barrel returns, and got trounced by funds that charge virtually nothing by comparison.

Hmmm…

Ever since I sat down late last year for a conversation with Andrew Smithers, a financial consultant in London, I’ve started to think that the benchmark, basic portfolio for an investor is probably 80% global equities and 20% inflation-protected Treasury bonds, rebalanced monthly.

I’m not saying it’s perfect or guaranteed to outperform, simply that the default portfolio—the one you would start with, before making adjustments for things like valuations and so on—would probably look something like that.

The virtue of such a portfolio is that it’s really easy to run and it’s low-cost. No expensive traders with Breitling watches throwing their iPhones against the wall. No pricey Bloomberg terminals and data feeds. No high-frequency trading platforms. No IT department. No M.B.A.S from Harvard or Ph.D.s from the Massachusetts Institute of Technology.

No “feeder funds.” No 2-and-20 fee structures. No brokerage commissions. No need to butter someone up at the golf club so you can get an “in.”

All you need is an online brokerage account.

Switch it on. Deposit money. Then invest 80% of your money in the Vanguard Total World Stock Index exchange-traded fund, which invests globally and charges just 0.19% a year in fees, and the other 20% in the Vanguard Admiral Inflation-Protected Securities fund, with an 0.1% fee structure. (If you have less than the $50,000 minimum, there’s a version with a slightly higher, 0.2%, fee structure).

source

[techmac]

9% a year? Where are all the myths about making decisions that are never wrong? And bragging about being profitable each and every day (like Goldman Sachs)? Of course that they are profitable - at the expense of their clients

[techmac]

These are probably the most important numbers to know when it comes to how do you want to invest your money :

This wasn’t a one-off. In 2012, according to eVestment, the average hedge fund gained 7.4% on behalf of its investors, net of fees.

The Key West portfolio? Um…17%.

Or, to put it another way, if a plutocrat put $10 million into the average hedge fund two years ago, according to eVestment he would today have $11.7 million.

But if he’d put it into this Key West portfolio he’d have $14.2 million. He’d have made more than twice the profits.