I don’t understand why there needs to be a catch. It seems like they’re just running a hedge fund where they tell everybody which things they’re buying. It’s an unusual thing to do, because you could probably get better returns by being more secretive (otherwise why are most hedge funds so secretive?).
You can become good at hedge-funding without having money as a primary motivation. If you did, you might try to start an open-access hedge fund just because it’s a neat idea.
They’re claiming that picking a subset of 20 S&P stocks and charging a 1% fee is an expected win for their clients’ net returns, so if what they’re actually selling is an expected money-losing strategy compared to buying the whole index, that seems like a catch
Exactly! So I think that is exactly the catch—I think the clients are paying for them to manage the money and update holdings according to their somewhat public strategy (following 13f?g? disclosures of what whales are buying has its lag, but can work out if they’re not short trades but long positions.. with limits). So it’s not obviously money losing if they outperform, and we don’t know that they will underperform the index. What we do know is that if they’re charging a fee to buy a rarely changing openly available list of stocks… then clients would be a little silly.
I don’t understand why there needs to be a catch. It seems like they’re just running a hedge fund where they tell everybody which things they’re buying. It’s an unusual thing to do, because you could probably get better returns by being more secretive (otherwise why are most hedge funds so secretive?).
You can become good at hedge-funding without having money as a primary motivation. If you did, you might try to start an open-access hedge fund just because it’s a neat idea.
They’re claiming that picking a subset of 20 S&P stocks and charging a 1% fee is an expected win for their clients’ net returns, so if what they’re actually selling is an expected money-losing strategy compared to buying the whole index, that seems like a catch
Exactly! So I think that is exactly the catch—I think the clients are paying for them to manage the money and update holdings according to their somewhat public strategy (following 13f?g? disclosures of what whales are buying has its lag, but can work out if they’re not short trades but long positions.. with limits). So it’s not obviously money losing if they outperform, and we don’t know that they will underperform the index. What we do know is that if they’re charging a fee to buy a rarely changing openly available list of stocks… then clients would be a little silly.