Is Hedge Fund the Best Investment to Beat the Market?

For those who take delight in the so-called “smart money” underperforming the “dumb money,” here are some enjoyable new data points that show hedge funds continue to be an overpriced, middling asset class.

Evidence suggest hedge funds may be expensive way to trail the market.

For those who take delight in the so-called “smart money” underperforming the “dumb money,” here are some enjoyable new data points that show hedge funds continue to be an overpriced, middling asset class, reports Nick Summers from Bloomberg.

Goldman Sachs’s quarterly report on the industry, which tracks 705 funds with a combined $1.5 trillion of bets on stocks, finds that hedge funds have returned an average of 5 percent in 2013, compared to a 15 percent gain in the Standard & Poor’s 500-stock index. Only 5 percent of the funds beat the S&P, while more than one in eight posted a loss. An added insult is that hedge funds charge their clients huge fees—typically, 2 percent of assets and 20 percent of any gains—for the privilege of investing their money and lagging the market.

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