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07-05-2017, 12:18 PM
Buffett Says Money Spent on Plumbers Better Than on Hedge Funds
by Noah Buhayar and Jordyn Holman
May 7, 2017, 3:05 AM GMT+8
Warren Buffett isn’t done criticizing hedge-fund managers for wasting clients’ money.
At the annual meeting of his Berkshire Hathaway Inc. he again pressed the argument that, in aggregate, investment professionals aren’t worth their fees -- and that people would be better off sticking their money in a low-cost index fund. He also challenged how hedge fund managers are paid.
"If you go to a dentist, if you hire a plumber, in all the professions, there is value added by the professionals as a group compared to doing it yourself or just randomly picking laymen," Buffett, 86, said. "In the investment world it isn’t true. The active group, the people that are professionals in aggregate, are not, cannot, do better than the aggregate of the people who just sit tight."
Vice Chairman Charles Munger, 93, said "it’s even worse than that" because some hedge fund managers with a long career in the industry -- known for charging 2 percent management fees and taking 20 percent of profits -- do well, attract money and then lose it.
More details in https://www.bloomberg.com/news/articles/...edge-funds
by Noah Buhayar and Jordyn Holman
May 7, 2017, 3:05 AM GMT+8
Warren Buffett isn’t done criticizing hedge-fund managers for wasting clients’ money.
At the annual meeting of his Berkshire Hathaway Inc. he again pressed the argument that, in aggregate, investment professionals aren’t worth their fees -- and that people would be better off sticking their money in a low-cost index fund. He also challenged how hedge fund managers are paid.
"If you go to a dentist, if you hire a plumber, in all the professions, there is value added by the professionals as a group compared to doing it yourself or just randomly picking laymen," Buffett, 86, said. "In the investment world it isn’t true. The active group, the people that are professionals in aggregate, are not, cannot, do better than the aggregate of the people who just sit tight."
Vice Chairman Charles Munger, 93, said "it’s even worse than that" because some hedge fund managers with a long career in the industry -- known for charging 2 percent management fees and taking 20 percent of profits -- do well, attract money and then lose it.
More details in https://www.bloomberg.com/news/articles/...edge-funds
Specuvestor: Asset - Business - Structure.
