[lbo-talk] hedge funds

[Doug Henwood]

A friend (actually an lbo-talk alum too) just ran some numbers on  
hedge fund performance, going back to 1992. Their performance is  
indistinguishable from the S&P 500. And since that's based on a hedge  
fund index, it overlooks the facts that: 1) hedge funds are often  
riskier than the S&P, 2) failed funds drop out of the index (known in  
the trade as a survivorship bias), and 3) the funds can play games to  
fudge their end-of-month numbers. So all those fees buy you less than  
nothing.

Further proof that everyone should just stick with an S&P index fund  
or some such.

Doug