A Jaw-Dropping Chart Shows What Really Happens To Hedge Fund Profits

Eric Falkenstein posted the following chart, which apparently comes from a book by Simon Lack, showing the real breakdown of hedge fund profits.

hedge fund

Photo: Falkenblog

After fees and fund-of-fund fees, just 3 per cent of profits end up going to investors.

Part of the reason for dismal returns?

The slaughter of 2008, which caused a total wipeout of real investor profits.

hedge fund chart

Photo: Falkenblog

We can’t verify the stats, and we suspect that measuring this stuff is pretty tough. But the general idea that the big money in hedge funds comes from running them, not investing in them, seems hard to argue with.

(Via Kevin Depew)

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