Active investors need to spend money to hire analysts, build computer models and high-frequency trading computers.
Let’s say it costs $10 dollar/per trade to do the analysis to be able to do a trade with a retail investor that nets the hedge fund $10.10. Even when there’s no strong competition with other hedge funds over that $0.10 of profit, the retail investor is still screwed by a significant $10.10.
Active investors need to spend money to hire analysts, build computer models and high-frequency trading computers.
Let’s say it costs $10 dollar/per trade to do the analysis to be able to do a trade with a retail investor that nets the hedge fund $10.10. Even when there’s no strong competition with other hedge funds over that $0.10 of profit, the retail investor is still screwed by a significant $10.10.