General Malaise
Footballguy
Guys.....
Not ALL hedge funds are created equally. Not ALL hedge funds are taking in pension money and shorting the markets. That's not how this works.
Pensions don't dole out money to hedge funds without extensive due diligence. They move at a glacial pace and are not looking for high risk funds; their singular goal is capital preservation first and foremost with income and growth targets that are pegged to lower risk benchmarks.
NOT ALL pensions, but the bulk of them are incredibly hard to get a check from for hedge fund managers. Don't believe me? Go ahead, start a fund and ask for money. I assure you it ain't easy and spoiled hedge fund brats aren't getting funded by pensions just because they were born on 3rd base and think they hit a triple.
Endowments, pensions, municipalities, etc use consultants to source their hedge fund managers. Those consultants are generally allergic to risk. Why? BECAUSE IF THEY RECOMMEND A HEDGE FUND MANAGER AND IT BLOWS UP, THAT'S THE END OF THEIR CAREER.
Next, hedge fund managers get paid when they do well. They get paid not only to be right but to be right RIGHT AWAY. Unless you're a fund manager with billions in AUM and can live on the 1% management fee (which goes to pay salaries and utilities and audits and accounting and legal, just to name a few). 20% performance fees are the reward for positive performance but if you're down one year, you gotta make that before you can charge a performance fee again. Sounds easy, right? Yeah, go try it. I beg you to try it. Your prime brokerage relationship will start at 100K per year. You'll need 10 million right off the bat just to stay solvent your first couple of years and raising money absent a track record? GLLLLLLLLLLLLLLLLLLLLLLLLL.......
I think it's easy to sit back and criticize hedge funds as this evil empire of lucky sperm clubbers who aren't really working for a living. That's some of them. That ain't the bulk of them and again, if you think it's so easy, you do it. Go ahead. See how easy it is to get pension money under management. I've been at this 20 years now and can count on one hook-hand how many pensions have given a firm I'm at money to run. For us and the most hedge funds, we represent high net worth (HNW), family offices or niche investors who are looking for diversification and an edge. These folks are about as loyal as your hot HS girlfriend, so it ain't exactly sticky money. You best perform or you'll be looking for another job in a hurry. Nothing like that sort of pressure to go to bed with every night.
Sorry, but the 'get a real job' take is particularly offensive to me and while I understand the disdain and anger some might have over hedge funds in general, I suggest doing a deeper dive into their existence and how they work before castigating the entire lot as spoiled, entitled, lazy, greedy, unethical scoundrels who are lacking scruples.
/Rant
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