The S&P is good because it changes a lot, always firing & hiring.
In 2008 Buffett bet with Protégé partners that S&P would gain more than a group of 5 FOF in the next 10 years. The S&P won to all , I don't know about the Sharpe ratios. Now that we are in 2023 some things have changed a bit. Some of the biggest Hedge Funds in the world are showing Sharpe ratios greater than 2. And they are doing it with thousands of positions!
Performance + many trades to me means = Not Luck
Funds People in Madrid did a piece with the following title:
¿QUÉ HACE ÚNICOS A LOS MAYORES HEDGE FUNDS?
How is this possible? To sustain high performance.
Some of the biggest Hedge Funds give all the profits back every year, they look like they don't want to grow and that is key to sustain the edge long term. Another important thing is that some of this Hedge Funds are not centered in one person, some have lots of teams and some rotation of teams. S&P is robust , it can be here in 100 year for sure. Hedge Funds need some monitoring , if they start growing in people & assets out of control we need to change.
The S&P is good because it changes a lot, always firing & hiring. It's also good because it lets the winners run.
In the Hedge funds we need to do something like that and we might have a nice ride. To buy some Hedge Funds and doing nothing might work as buying S&P and doing nothing. The winners will take care of the losers. However I think we need to be a bit more active in the Hedge Funds than in the S&p.
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