
Hedge Fund Math: Heads We Win, Tails You Lose - JumpCrisscross
http://www.nytimes.com/2016/12/22/business/hedge-fund-fees-returns.html?emc=edit_dk_20161223&nl=dealbook&nlid=65508833&ref=dealbook&te=1&_r=0
======
Periodic
Why aren't hedge funds compensated based on some sort of alpha, the difference
from a benchmark? One of the common memes of investing over the last few
decades is that no one can reliably beat the market. It's very easy to use an
index fund to track the market at very low cost. If I invest in an actively
managed fund I want them to be compensated for doing better than I could have
done myself.

There are a few advantages to this, in my eyes:

1\. They only get compensated for their value, not the rising of the economy.
It's terrible for the investor to have an economy that's going bonkers and the
hedge fund that's taking 20% of that while not providing their own value. You
could easily be doing worse after fees. 2\. It incentivises managers to figure
out ways to avoid losses. If the market drops 10% in a year, but the fund only
drops 5%, treat it similarly to a profit of 5% because that's the value the
hedge fund provided.

Looking at any investment gains in isolation is outdated. Investing is easier
than ever for the layperson. We need to start looking at the opportunity
costs.

~~~
n00b101
_" Why aren't hedge funds compensated based on some sort of alpha, the
difference from a benchmark?"_

This is called a "relative return" strategy. Suppose the benchmark falls 70%
and the hedge fund loses 50%. Your hedge fund manager has lost half your
money, but has beat the benchmark by 20% (i.e. "positive alpha"). How does a
fee based on alpha work in this case?

Hedge funds generally claim that they aim to achieve a positive return on
investment regardless of whether markets are rising or falling (i.e. "absolute
return strategy"). In theory, this means that hedge funds should have low
correlation with the benchmark. This low correlation is attractive to
investors because it provides a diversification benefit and (in theory)
improves their efficient frontier. Low (or ideally zero) correlation to the
benchmark is the main reason that institutional investors are willing to pay
expensive hedge funds fees. However, if hedge fund managers have incentives
based on relative returns to the benchmark, then hedge funds will be more
correlated to the benchmark.

~~~
escape_goat
I'm asking for my edification, rather that putting forward a line of argument,
but assuming for a moment that the trades are not so large as to have a direct
impact on the market, there would appear to be a great deal of hindsight
information available upon which to build a benchmark.

A hedge fund appears to be an investment strategy that compensates for having
imperfect information. Why is it not possible to estimate an alpha on the
range between the results of a completely naive Monte Carlo simulation ("no
information") and the results of a search for the optimal hindsight strategy
("perfect information")? That is, the payoff for the manager will be fixed and
proportional to the fraction of hindsight performance that he achieves.

You might not want to peg compensation directly to this, but rather to
relative performance against the alpha (compared to other management
strategies), but that's more of a salary negotiation detail.

This is the sort of idea that my brain comes up with when I try to think,
except I somehow doubt that I am all that much brighter than the average hedge
fund manager. I hope I'm not just wasting your time with the obvious, but why
doesn't a system like that work?

~~~
ctrl_freak
I'm not an investment expert, but wouldn't there be virtually unlimited upside
in an optimal hindsight strategy? I.e. you could use derivatives and other
financial instruments to gain an arbitrary amount of leverage and hence
return, since there would be no risk.

~~~
pyromine
Expanding on this, this idea of looking backwards as a method determining what
returns you could have made is actually the root of a lot of _bad_ investment
advice.

People often look back and try to determine some type of optimal portfolio
that they claim is the best in all economic environments because they found it
to be the best portfolio in the certain timeframe they looked, but they had
the benefit of checking hundreds of different potential sets of funds and if
you were to actually calculate the probability that composition of funds is
better than any other composition you'd find that it was just random chance it
provided the best returns over that time frame.

Granted there is a lot to learn from looking back, but it's also very
imperfect if you're not taking in to the benefit of hindsight.

~~~
cocoablazing
Compensating for this effect of training may be done by properly discounting
the measure using the Deflated Sharpe Ratio or similar corrected SR's. I
always ask any interviewee who cites experience producing these measures a
question with this effect as the crux. Few come back with a correct answer.

------
fovc
Hedge fund math = regular math. When you charge 2 and 20 but have slim or
negative returns, the 2% dominates the 20%. Investors don't like the fixed
part of fees, and want to be able to claw back some of the variable fees when
later years are bad. Note that this already happens in reverse due to high-
water marks (e.g. if you lose 20% one year and then make 25% the next, you
don't get a performance fee since you're just back to even). Some investors
would like to be able to do the same but in reverse.

In my mind, this is a business like any other. With more competition the price
goes down. For HF that means lower fixed fees, higher hurdle rates, lower
variable fees, or some combination. On top of that, you can look at it like
any risky contract. If you want lower fixed fees, you'll have to pay more in
variable fees, and your expected cost will be higher as the managers bear more
risk

~~~
kolbe
This is nothing like regular math. It isn't even like its closest competitor:
private equity. They only get to take performance fees on exits, which can
take years or even decades (or never) to materialize.

~~~
vostok
> It isn't even like its closest competitor: private equity. They only get to
> take performance fees on exits, which can take years or even decades (or
> never) to materialize.

I would argue that private equity is much worse on fees than hedge funds.
Among other offenses, they're able to charge fees to both portfolio companies
and investors. The investors usually get a credit for the fees paid by
portfolio companies, but it's not a 100% offset.

To an outside observer, this seems to buy you performance that isn't too
different from exposure to infrequently marked leveraged standard risk premia.

~~~
kolbe
Private Equity has its own little scams, no doubt. But that doesn't excuse the
hedge fund business's "top tick" performance fee scam. Basically, a person
like Ackman and some friends could (in theory) bid up a stock 1000%, mark it
there at the end of the month or year (or whenever they account for the
performance fee), take their performance fee on that mark, and let it crash.
In fact, doesn't that sound a lot like Valiant? 30% of the company was owned
by Ackman and people close to him.

~~~
vostok
> Basically, a person like Ackman and some friends could (in theory) bid up a
> stock 1000%, mark it there at the end of the month or year (or whenever they
> account for the performance fee), take their performance fee on that mark,
> and let it crash. In fact, doesn't that sound a lot like Valiant?

How much do you think Ackman lost in personal money on Valeant? You don't
think it's much more than the performance fees that he earned from it?

------
adevine
Buffet has said this about hedge funds for a long time now. Their fee
structure incentivizes volatility, not long term performance, which is a bit
ironic because the reason for the name "hedge" fund is that they should have
the ability to do better risk management.

~~~
tomp
> Their fee structure incentivizes volatility, not long term performance

Can you explain why?

~~~
bo1024
Suppose the fund gets 2% of all profits in a profitable year and gets nothing
in an unprofitable year.

Scenario 1: 100 million dollar profits for two years in a row. Fund gets 4
million, customer gets 196 million.

Scenario 2: 300 million dollar profit in the first year, 300 million dollar
loss in the second year. Fund gets 6 million, customer ends up with -6
million.

~~~
Streeir
Most of the arguments in this comments sections are outdated. The same goes to
the 'Buffet argument'. Most of the funds (after 2008) run with High-Watermark
rule. Thus, in the case of your Scenario 2, fund will get nothing from the
next 300 million it makes (apart from fixed fees). Thus, the investor will end
up with 294 million at period 3. Just like if the fund made 100 million for 3
periods consequently.

~~~
Dylan16807
That applies if people leave their money in the fund forever. If some of that
cycles then there are no high water marks on the new money.

------
jalopy
There are some funds that have much better incentive structures than the
standard 2-and-20. In particular, some funds charge an incentive fee over a
hurdle rate of say, 6%. Even more fair to investors - this hurdle rate
compounds and is subject to a high water mark - where the management company
must beat the previous highest amount attained by the fund by the compounding
hurdle rate. Additionally, some managers also credit any (usually lower)
management fee to the incentive fee.

The downside is that the incentive fees get much more complicated - too
complicated to lay out here. I've modeled the scenarios in the following
Google Spreadsheet (feel free to copy and play around with this):
[https://docs.google.com/spreadsheets/d/1RlB4iwg42dEa-
atdti4H...](https://docs.google.com/spreadsheets/d/1RlB4iwg42dEa-
atdti4HgV03qI0SaEZKp90tDp-iBOY/edit?usp=sharing)

If you do check it out:

Notice that in the [high ret] scenarios, there's little difference in total
fees charged between the "fair" 6% hurdle and the 2-and-20 scenario. However,
in the [low ret] scenario, the fee difference can be quite substantial: $227k
for 2-and-20 vs $70k for the 6% hurdle scenario. And the resulting

Please feel free to copy and play with the values if you'd like. I'd love to
discuss in more depth.

The 6% hurdle is a reasonably fair expectation of annualized stock market
returns going forward for next 10-20yrs. If there's sufficient interest please
reply to this comment and I can detail reasons why, most likely in a full
fledged post.

(Over the next 3-5 years, I believe "market returns" \- defined as those
received from SPY ETF - are likely to be less than 6% from this point (Dec 23
2016), possibly significantly so.)

~~~
HappyTypist
I'd love to hear why you believe 6% is a reasonably fair expectation of
annualised stock market returns going forward for the next 10-20 years!

~~~
cjlars
It's in line with historical averages, some decades are slightly down or up a
lot, but over, say 30 year horizons, public equity delivers reasonably
consistent returns. A 6% real return on the S&P 500 is a pretty standard
assumption in the finance biz.

[http://www.fool.com/investing/general/2016/04/22/how-have-
st...](http://www.fool.com/investing/general/2016/04/22/how-have-stocks-fared-
the-last-50-years-youll-be-s.aspx)

~~~
FabHK
FWIW, I think it's optimistic to assume 6% real returns for retirement
planning purposes the coming decades.

~~~
cjlars
Serious question: Why do you think that and how did you get there?

Real returns 1950-2009 are 7% [1], so my numbers are already rounded down a
bit. You might further adjust for, say Shiller 10 year P/E numbers, but how
complex do you want to make it?

[1] [http://www.simplestockinvesting.com/SP500-historical-real-
to...](http://www.simplestockinvesting.com/SP500-historical-real-total-
returns.htm)

------
seanpquig
Glad to see investors are starting to push back on these ridiculous fees. For
decades, the whole hedge fund industry, along with more traditional actively
managed funds and financial advisors have been charging fees that can't
possibly be warranted by the "value" they add.

I don't doubt that there are strategies and traders who can add skill-based
alpha to broad market returns, but the catch is that it is essentially
impossible to attribute performance to skill or luck. You may say consistently
outperforming the market for 5, 10 or even 20 years is the mark of a great
investor, but given the number of funds and players in the space, simple
statistics would conclude such outcomes should routinely occur. You see it
again and again where some manager has a remarkable run, raises tons of money,
and proceeds to encounter mediocre/terrible performance. Some former "genius",
do-no-wrong managers have actually lost way more client money than they've
ever made because they attract tons of money after a lucky run and then
proceed to tank.

The silliest part of the hedge fund industry is seeing all these funds and
media retro-fit all kinds of rosy superlatives and sophisticated explanations
onto a good year or two run, without ever acknowledging the likely role of
luck and randomness.

Warren Buffets essay "The Superinvestors of Grahm-and-Doddsville" perfectly
captures so much of this dynamic in a fun hypothetical exercise:
[http://www.tilsonfunds.com/superinvestors.html](http://www.tilsonfunds.com/superinvestors.html)

~~~
xenadu02
To the extent that anyone is able to run a strategy that does beat the market:

a) they probably can't tell the difference between getting lucky and
exploiting a niche

b) if they take on more capital their movements will be discovered and the
strategy will fall apart

If you're well connected I'm sure you can eventually find a few funds trading
on true insider info or novel strategies... but good luck getting in. As soon
as the cat is out of the bag the party is over.

For the rest of us: forget it.

------
ikeboy
[https://www.bloomberg.com/view/articles/2015-05-05/rich-
hedg...](https://www.bloomberg.com/view/articles/2015-05-05/rich-hedge-fund-
managers-are-still-rich)

>But "hedge funds are a compensation scheme masquerading as an asset class,"
and maybe there's some value in the compensation scheme itself. If you are
looking to hedge funds for outsize returns, you might want to pay your manager
an option on your returns, by giving him a performance fee of 20 percent of
the upside and limited penalties on the downside. Options increase in value
with volatility, and giving a manager asymmetric rewards might encourage
desirable risk-taking. That might be exactly what you want if you're a pension
fund investing a small chunk of your portfolio with hedge funds in order to
earn above-market returns. On the other hand, if your manager is already a
billionaire investing a big percentage of his net worth alongside you, he
might be more conservative with your money than you are, or than you want.
It's probably more important for him to stay a billionaire than to rack up
more money.

------
JumpCrisscross
Curious how liquidity works against hedge fund investors.

Contrast a VC fund and hedge fund charging 2 and 20 on a $10 million
investment over 5 years. Suppose they invest in identically performing assets.
They buy at 100, it's valued at 110 at the end of Year 1, 200 at the end of
Year 2, 190 at the end of Year 3, 180 at the end of Year 4 and 170 at the end
of Year 5.

Both collect $1 million in management fees (the 2). VC collects 20% of the $7
million profit it made, _i.e._ $1.4 million. This happens once; VC carry is
typically assessed only on distribution. So total fees of $2.4 million or
roughly 1/3 of the gains.

Hedge fund managers calculate gains, and thus carry, at the end of each year.
Our manager thus collects 20% of the $1 million Year 1 profit and 20% of the
$9 million Year 2 profit, _i.e._ $2 million of Year 1 and Year 2 carry. No
carry is earned for the subsequent years. Together with the management fees we
have $3 million of fees for the same $7 million of gains, _i.e._ over 2/5ths
of the profits or 25% more than the VC.

~~~
qwrusz
Not exactly sure what you're asking but happy to try answer any q's.

Couple points: I realize your example scenario is very hypothetical and just
rough math, but a heads up about understating fees as these add up fast: For
the hedge fund in year 2 when the value of the fund doubles to $20M or
whatever it gets to, the 2% management fees are charged on those higher
amounts. So after year 1 fees are ~$400k, ~380K, $360K etc...

With that said, a hedge fund is going to have much higher operating costs than
a VC firm. The trading systems and technology costs at hedge funds can get
very expensive and it comes out of the 2%. What does a VC firm need 2% every
year for? Many of them seem to do their job using only a blue bottle coffee
gift card and an iPad to check their schedules and answer emails, what are
those management fees spent on?

Also despite having 2 and 20 in common, hedge funds and VC funds are
completely different animals, comparing them is really apples to oranges. But
yes in your example HF managers can earn more, one could just as easily come
up with a scenario where the VC guys earn more.

Lastly, in some cases there is "clawback" on hedge fund fees. The hedge fund
would give back some of the previously earned performance fees if say there's
consecutive down years. It depends on the terms of fund, every fund is
different and the documents of a fund's terms can be hundreds of pages long.

~~~
JumpCrisscross
> _Not exactly sure what you 're asking_

Pardon me, that was "curious" as in "exciting attention as strange, novel, or
unexpected" [1], not short for "I am curious". That said, thank you for your
comment.

> _one could just as easily come up with a scenario where the VC guys earn
> more_

When comparing carry-on-distribution versus carry-on-mark, _ceteris paribus_ ,
I don't think so. High-water marks and clawbacks help, but they're ultimately
a patch for a time-horizon mismatch between the LP and the GP.

Note that I wasn't comparing VC and hedge funds. I was comparing how they
calculate carried interest. A hedge fund manager charging carry like a VC
would assess on redemption, or at least only when a position is sold. The
liquidity and transparency that benefit investors also give hedge fund
managers another way to charge fees.

[1] [https://www.merriam-webster.com/dictionary/curious](https://www.merriam-
webster.com/dictionary/curious)

~~~
qwrusz
Haha, oh that definition of curious. My bad. (side note: _I am curious_ why
the M-W dictionary puts the archaic and obsolete definitions first)

Gotcha on the carried interest. Ya we have come a long way from sailing
molasses across the ocean to calculate a carry. While scenarios and clauses
can change payment to managers, c.p. or not, if we cut to the chase I think
it's safe to say yes the incentive carry structures in hedge funds generally
favor HF managers getting paid much more compared to VCs. When the top HF
managers annual pay news articles come out, these numbers can get crazy, top
10 HF managers can make more in one year than the entire net worth of a top
venture capitalist with decades in the industry. But VC guys get to do way
more interesting investing, meeting with new tech companies is much cooler
than public equity research I think. Thanks for posting this article btw.

~~~
JumpCrisscross
> _sailing molasses across the ocean to calculate a carry_

Got a reference on this? Sounds fascinating.

~~~
qwrusz
[https://en.wikipedia.org/wiki/Carried_interest#Definition_an...](https://en.wikipedia.org/wiki/Carried_interest#Definition_and_history)

[https://dash.harvard.edu/bitstream/handle/1/12274462/Legnani...](https://dash.harvard.edu/bitstream/handle/1/12274462/Legnani_gsas.harvard_0084L_11471.pdf)

------
conistonwater
Do we know if the customers definitely pay the fees in full? One might imagine
a large customer (like a pension fund) might be able to negotiate a discount,
and the discount might not show up in the published returns, or something like
that?

~~~
soVeryTired
Fees are coming way down in the industry - very few shops can charge 2 and 20
these days. A flat fee of 1% is much more likely. Bill Ackman was a rockstar
od the industry, so could get away with it for longer than most. Not any more.

Even in the old days, 2 and 20 was the starting point for a negotiation. If a
client can bump up a firm's assets under management significantly, they have a
lot of bargaining power.

------
Animats
The fact that supposedly "sophisticated investors" didn't figure this out
years ago amazes me. Hedge funds, as a class, don't perform that well.

The main difference between hedge funds and regular mutual funds is that
regular funds have to report their numbers in a standardized way. The SEC
requires mutual funds to report 1, 5, and 10 year performance, after all fees.
Hedge funds don't have to do that. That lets them boast about their
performance in good years, and shut up in bad years. This fools a surprising
number of investors.

Under US law, hedge funds are for "sophisticated investors". Unfortunately,
pension funds qualify.

~~~
rbcgerard
Every one knows this, its not news...

As to the boasting about performance, hedge funds are not allowed to disclose
their performance to the general public

Additionally, while some hedge funds might not be very different from a mutual
fund, there are huge differences in what you can do in a regulated vs
unregulated vehicle

~~~
Animats
Hedge funds are allowed to disclose their performance. About 7,000 of them
do.[1] They just don't have to.

[1]
[http://corporate.morningstar.com/US/asp/subject.aspx?xmlfile...](http://corporate.morningstar.com/US/asp/subject.aspx?xmlfile=545.xml)

~~~
rbcgerard
and i'm pretty sure you have to attest to being an accredited investor/QP to
access it, i.e. its not open to the general public

------
curiousgal
>The answer can be found in relatively simple math. As a simple example,
consider an investment of $1 million in a fund that generates a 10 percent
return in years one and two and then loses 5 percent in years three and four.
The investor would end up with about $1.09 million, a total gain of $90,000,
or 9 percent, over the four years before fees.

1,000,000x(1.1x1.1x0.95x0.95-1) = 92,025

Why do you bother rounding down the figure and using a different unit (m$) if
you are going to use the same unit eventually. ($92,025 = $0.09 million =
$90,000).

>the fund manager earns $20,000 and $20,400 for a total of $40,400

And then they proceed to take $400 into account. Vexing.

~~~
zpr
Ah yeah, was wondering where that $400 came from

------
Jabbles
Presumably the people who invest in hedge funds are intelligent, knowledgeable
people who can understand these fees. The examples in the article don't
require more than school-level maths.

So why is there no demand (and ~hence supply) for "fairer" or more-aligned
incentives? There must be a price (in management fees) which would eliminate
the reward for losing against the market. In which case, is this article
complaining about something that is not widely seen as a problem?

~~~
SalvatoreDali
"Presumably the people who invest in hedge funds are intelligent,
knowledgeable people who can understand these fees." You would be surprised.
Many of these investors are large institutional funds like state pensions
funds. They have a large sum of money that needs to be put somewhere,
preferably with minimum due diligence, and 100s of mediocre indistinguishable
funds to chose from. People are more apt to pay attention when they are
managing their own money

~~~
ec109685
Do you have citations for this?

~~~
SalvatoreDali
For which part?

------
jstewartmobile
Institutions who deal with hedge funds (especially public pensions) are loaded
with consultants, attorneys, and analysts. If they get hoodwinked, it is
probably due to their own lack of due-dilligence.

I think the effort would be better spent covering one of the many cases where
ordinary people without consultants, attorneys, and analysts are in a "Heads
We Win, Tails You Lose" situation.

------
jgalt212
These investors got off easy as far as Ackman's customers go. Investors in his
Target fund (Pershing Square IV) lost more than 90% of their money.

[http://seekingalpha.com/article/119879-bill-ackmans-hedge-
fu...](http://seekingalpha.com/article/119879-bill-ackmans-hedge-fund-losses-
are-staggering)

------
rbcgerard
for being based in new york, and ostensibly the nation's newspaper of record,
the new york times, regularly (either through ignorance or malice, distorts
the story

yes - if a hedge fund under-performs, investors still ended up paying a bunch
of money for under-performance. I'm not sure what is surprising here.

As it relates to incentive fees, the issue that needs to be discussed is when
is incentive calculated, is there a claw back, and is there a high-water mark?

Different funds' positions on these issues varies considerably, but its not
some mysterious subject.

------
AndrewKemendo
How is this not well understood?

The metaphor I always use for people is with lawyers. In most cases (unless
they are working on contingency), whether you win or lose the lawyer gets
paid.

------
gozur88
I'm not that sympathetic to hedge fund investors. Hedge funds are supposed to
be high risk - high return investments. If you want a bit more safety put your
money in an index fund.

Also, there are some big winners, but I'd be shocked if all the hedge funds
together turned a profit after fees.

------
batmansmk
The hedge fund still needs to be compensated for their time and skillset. In
my life, time is the most precious resource I have. This investor's rant has a
paradoxical comical impact for a rich man's tragedy.

------
zallarak
The fee structure is very simple and transparent. Customers didn't get tricked
or legally trapped, they just didn't consider what happens if the fund loses
money.

------
jstewartmobile
For Ackman's underperforming fund to cost you money, you would have to invest
in it, and even then, it's still probably not as bad as a lot of "actively"
managed mutual funds that charge incredible fees to track similar index funds.
That, and the losses are still private.

It's like there's little to no distinction between an iffy private investment
vehicle (with private losses) to what the investment banks get up to: Goldman
and JP Morgan take risky bets, fail, then have the government/taxpayer top
them back up to 100% + profits and bonuses -- while the debtors are still on
the hook with little to no government relief.

~~~
JumpCrisscross
> _Ackman 's underperforming fund...[is] still probably not as bad as a lot of
> "actively" managed mutual funds that charge incredible fees to track similar
> index funds_

Ackman's fund _is_ an actively-managed fund. I think these articles are
appropriate for putting guardrails on what public controllers, _e.g._ of state
pension funds, should and should not accept in terms of fees. Nobody is
calling for regulating investment vehicle fee structures for wealthy
individuals.

~~~
jstewartmobile
This is not realistic in terms of how power works.

When you have a wiz-bang asset allocator like Swensen (Yale) or Bronner (RSA),
no one is going to have enough political juice to put restraints on them, and
even if they did, typical legislators/administrators are largely too ignorant
of the process and fee structures to come up with restraints in the first
place.

~~~
JumpCrisscross
> _legislators /administrators are largely too ignorant of the process and fee
> structures_

You're criticizing an article for bringing attention to something you claim
cannot be changed because nobody pays attention to it?

~~~
jstewartmobile
I'm criticizing it for being a non-issue compared to investment banking
regulatory capture.

No one is forced to put money in his hedge fund. If his fees are too high and
his performance is too low, that's his investors' problem.

Whereas with much of the banking industry, taxpayers are on the hook with
little to no say in the matter.

~~~
eropple
_> No one is forced to put money in his hedge fund._

...except the people represented by those "legislators and regulators" that
you sneer at for being ignorant, and thus can be _educated_ by articles like
this.

Your posts in this thread feel like libertarian position-staking more than
anything coherent.

~~~
jstewartmobile
Haven't met many libertarians who complain about regulatory capture.

My complaint is that this article is a distraction.

People who deal with hedge funds (especially public pensions) are loaded with
consultants, attorneys, and analysts. If they get hoodwinked, it is probably
due to their own lack of due-dilligence.

I think the effort would be better spent covering one of the many cases where
ordinary people without consultants, attorneys, and analysts are in a "Heads
We Win, Tails You Lose" situation.

~~~
eropple
That's fair; I withdraw the libertarian comparison and I apologize. But what's
to say we can't pay attention to both at once? I feel like this is kind of a
false economy.

~~~
jstewartmobile
Any article crying boo-hoo for hedge fund investors is up to something. People
who can invest in hedge funds are big boys who can look out for themselves.

At the same time, there are so many bogus mainstream investment vehicles (like
so many heavy-load, low-performance mutual funds that a lot of employees are
stuck with because that's what their 401k offers), advertised in newspapers
and television, that are far more deserving of media scrutiny. I can't help
but suspect that part of the reason why they are not scrutinized is that they
are well-paying advertisers.

Ackermann is probably getting a colonoscopy here because he is not an
advertiser.

------
carsongross
"But where are all the customer's yachts?"

~~~
vostok
I understand the origin of the phrase, but I always thought I would be
somewhat upset if pension funds started buying yachts.

Pension funds are the customers here and it would be pretty bad if they
started buying yachts.

~~~
zpr
You should be, unless they also maintain them themselves -- you know, with
those "management" fees.

------
known
"Give me control of a nation's money supply, and I care not who makes its
laws." \--Rothschild, 1744

