Are hedge funds just delivering beta?

    • Thread Starter

    What do people think about the hedge fund industry?

    A lot of people I talk to say that a lot of them are charging alpha fees for really just delivering beta.

    For those of you who don't know - alpha means what a hedge fund does above just market performance adjusted for risk, beta is correlated to market performance. Essentially a lot of hedge fund returns are highly correlated to the market.

    The rate of return might be similar to the market performance but the risk-adjusted return is higher. People pay hedge fund managers the fees because they believe that they will manage the money better to avoid large losses when there is a market downturn so their money will be safer in his or her hands than in an ETF
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