On Monday I shall be taking part in a debate on this topic on Monday evening in NY with my friend Peter Fell, from Kenmar, at The Harvard Club. I am looking forward to the opportunity to discuss with other investors how hedge fund clients might improve upon the frankly abysmal results that the industry has delivered. Fees, lack of transparency, gates and other elements all combine to ensure that whatever profits hedge funds generate are taken up in fees.
Investors deserve far better than they have received, and I’m looking forward to an entertaining and lively discussion.
Do you agree that there’s a math error in your book?
The claim has been made here http://www.amazon.ca/The-Hedge-Fund-Mirage-Illusion/dp/1118164318 as follows:
“An investor puts $1 million in a fund that has a +50% return, he adds another $1 million, the fund then has a -40% return. Net, the investor has lost 25% of his money. The fund will report a compound average annual growth rate of negative 5.13%. [ ....] the author makes the claim that the fund will report a positive 5.13% compounded annual return: a math error that fuels a couple of pages of rant about funds making money when investors lose.
By: John Chandler (@JohnChandlerEdm) on April 23, 2012
at 8:17 pm
Hi John. Yes, that was an unfortunate typographical error that doesn’t relate to the book’s conclusions. Have you read it?
Simon
By: Simon Lack on April 24, 2012
at 7:51 pm