George Soros Hedge Fund Industry
George Soros Criticizes Hedge Fund Industry at Davos
George Soros is one of the most recognized face in the hedge fund industry, even though he has largely removed himself from active investing after returning money to outside investors and focusing on managing his own fortune. Still, Mr. Soros holds enormous sway with investors given his contributions to the industry and his enduring legacy as one of the most respected traders ever. So many were interested to hear what Mr. Soros would say in Davos regarding the current state of the hedge fund industry.
He was largely critical of the current model, saying that the hedge fund industry is too crowded and fees are too high, telling Bloomberg: "Since hedge funds are now a dominant force in the market, they can’t, as a group, outperform the market."
“Since hedge funds are now a dominant force in the market, they can’t, as a group, outperform the market,” Soros said today in a Bloomberg Television interview with Erik Schatzkerfrom the World Economic Forum in Davos, Switzerland. The funds’ fees, typically 2 percent of assets and 20 percent of returns, eat into profits, Soros said.
Soros’s hedge fund operated until 2011, when he turned New York-based Soros Fund Management LLC into a family office that now oversees $24 billion. He averaged returns of about 20 percent a year since 1969 at the firm and its predecessor.
Hedge-fund performance will also be impeded because managers and investors are reluctant to take risks, Soros said.
“Outperforming the market with low volatility on a consistent basis is an impossibility,” said Soros, 82. “I outperformed the market for 30-odd years, but not with low volatility.”