Everyone knows that overall hedge fund performance has been lackluster since the financial crisis, but there are differing explanations as to why.
Last week, at the World Economic Forum in Davos, George Soros threw in his two cents (but it was obscured by some other news).
Soros’ bottom line was that hedge funds can’t beat the market, in part, because there are so many of them and they are now a dominant force in the market.
The other reason why Soros says they can’t beat (which is sure to make some managers upset) is that the famous hedge fund “2 and 20” compensation scheme is eating into profits (2 and 20 = 2% of AUM charged for management fees, 20% returns above a certain benchmark go to the fund).
Check out the video below, and keep in mind, Soros only manages his own money now, so he doesn’t have to worry about the fees he charges investors.