Top 10 Hedge Fund Myths
There was an interesting article posted over the weekend by the Business Times Online this week entitled "Hedge Fund Managers, Lords of Lucre." The article discusses the general public's view of hedge funds and how they make money. The journalist who wrote the article uses several extreme examples while depicting the hedge fund industry, this is part of why I write in this blog. There are a lot of aspects about the hedge fund industry that would be hard or nearly impossible to learn by reading mainstream media sources on the subject. To help answer the question about who hedge fund managers are here is a list of what is not true.
Top 10 Hedge Fund Myths
- Most hedge fund managers are billionaires
- Hedge Funds are risky investment vehicles
- The hedge fund industry in general is struggling and investors are taking their money out of these types of investments
- The United States has the same access to hedge funds as other developed countries
- Hedge Funds aren't performing as well as mutual funds or stock market indicies
- It is very hard to get any job within the hedge fund industry
- Hedge fund managers generally drive Ferrari's and live in extreme excess
- It is hard to learn anything about what hedge funds do or even what strategies they use
- Hedge funds blow up all the time
- Most hedge funds manage billions of dollars of capital
Are you a hedge fund manager or consultant in the industry? Want to share a couple more myths that you often run into with clients or investors? Please comment below or email me at Richard@RichardCWilson.com and I'll post your ideas as well.
1.23.08 Post Update: A blog reader has contributed the following additional myths to this list:
11. Hedge fund managers are cowboys who enjoy hurting the markets
12. Hedge fund managers have some "secret" to trading the markets
13. Hedge fund managers have it easy and really don't have to work to hard (my favorite new addition to the list)
14. Hedge funds cause market volatility. and the obvious corollary – they prosper at the expense of the common investor.
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