Why Don't Progressives Use Their Power as Hedge Fund Customers to Challenge Hedge Fund Compensation? | Coyote Blog
Progressives, and progressive institutions invest in these things, which makes sense.
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"Kevin Drum observes that the top 25 hedge fund managers earned $13 billion in total, including one hapless dude who made $250 million despite losing money and shutting down the fund.
I will say that I have always scratched my head over asset manager compensation. The tradition is that they get paid as a percentage of assets managed, sometimes with a percentage of the profits as well but never taking a percentage of the losses. Perhaps this made some sense with smaller pools of money, but today with huge pools of money, the same old percentages yield ludicrous compensation results. I certainly understand why the managers would defend this compensation scheme, but why do customers accept it?
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Which got me to thinking about the customers of hedge funds. Aren't many of these customers progressive or controlled by progressives? Hedge funds have been very successful marketing to university endowments, non-profit foundations, and public pension funds -- aren't these institutions often controlled by progressives, or at least left-liberals? Aren't a disproportionate share of the very high net worth Hollywood and billionaire types who invest in hedge funds also progressive or liberal? Heck, Hillary Clinton's son-in-law ran a hedge fund until recently. So why don't these folks get together and instead of worrying about whether their portfolios are invested in Israel or Exxon or some other progressive bette noir, why don't they agree to a set of principles as to how they are going to pay for their asset management services in the future, and stick to these? I say that progressives should get together, because they are politically passionate about this, but I can't think of any good reason why good libertarians or conservatives wouldn't happily join in to reduce their fees."
Thanks, Coyote for clarifying this matter. Remember don't invest like a progressive, invest in cheap and effective index funds!