Morgan Stanley’s Adam Parker has an update to a chart we’ve seen a lot lately.
It’s the correlation between the the equity hedge fund index and the S&P 500.
As you can see, the correlation has been getting closer and closer to 1, which means that they’re increasingly moving hand-in-hand.
However, hedge funds are notorious for charging extremely high fees.
Assuming this relationship holds, it’s probably a lot smarter to just buy a cheap mutual fund indexed to the S&P 500 like the Vanguard 500.
Photo: Factset, Morgan Stanley Research