Re:Hedge Funds Are Pocketing Much of Their Clients' Gains wi...
by ddmitriev on Monday February 10, 2025 @11:26PM
(#43008963)
This does not sound right. Maybe venture capital funds work this way? (I wouldn't know about them.)
But with regular hedge funds, you are joining a portfolio and you do get the return even on the positions that were in place at the time you invested. The only differences between investors that may affect the return that is allocated to them are a) their share classes, which may affect investment terms such as fees or withdrawal rights, and b) their respective high watermarks, which may affect the payment of performance fees. Everything else within the same fund will be the same.
like A) from being ineligible to be in hedge funds, and then B) to justify their fear
but hedge fund returns are not able to really be aggregated so simply, there have been attempts, I can pull up whatever article you're probably thinking about, but in real life if you join a hedge fund, you aren't joining a portfolio, your capital is applied to new positions.
so every subscription to a hedge fund has unique performance. only people that joined at the exact same time with the same amount of capital have a chance of having the same experience.
I think that reality muddies most of the discussion about the concept of hedge funds and investor returns.
You should definitely look for the strategy you like, followed by liking the people running the fund.