One simple fact explains it all. The top hedge funds are where all the best performing risk-adjusted returns in the stock market have come from. Here’s the numbers and facts.
Why invest in a hedge fund? Because the Baupost Group, Renaissance Technologies and the Buffet Partnerships are among a few top hedge funds who have made investments that have beaten the benchmarks and the masses for decades.
According to usnews.com Renaissance Technologies is a powerful investor in the hedge fund field and investments. They have posted a 66% average per year gross return since 1988! With 39% after fees. let’s develop what that means for its investors.
“The stock market is a device for transferring money from the impatient, to the patient.” -Warren E. BuffettClick to tweet
39% net return after fees means a little less than $80,000 per year average profit on a portfolio worth just $200,000, certainly not an extraordinary savings sum for a middle economic class American household. The average profit breaks down into about $6,500 per month.
Increase the amount to a household with $500,000 in investments and the returns come in even higher. Clocking in at a lofty $16,250 per month. According to cnbc.com the top 15% of American households hold such amounts and greater in savings and assets.
According to the Bureau of Labor Statistics, the median earnings for full time workers in 2017 was $3,460 per month. Top hedge funds are a way for people to break out of the middle economic class if they can qualify. Hedge funds are notoriously difficult to qualify for due to income and wealth requirement laws. It would be easy to invest in a hedge fund otherwise.
How much will not investing in a top hedge fund cost you in lost profits?
Renaissance Technologies isn’t the only investment superstar. The Baupost Group, headed by investing legend Seth Klarman, has returned 20% annually to its investors since 1982. Investors with this fund would see average yearly profits of about $160,000 on $800,000. This comes out to $13,333.33 per month.
Perishing Square Holdings is run by billionaire investor Bill Ackman in New York City. Returning 58% to its investors in 2019 this fund makes the top of the list. Incorporated in the United Kingdom, this fund is available for purchase in the United States under the ticker symbol PSHZF.
Tiger Global Management is a quality hedge fund. Starting with $8 million in 1980 this hedge fund exploded to over $22 billion under management by summer, 1998. This explosion happened for good reason. From 2016-2019, Tiger averaged 22.4% making it the best performer among large hedge funds for this specific time period.
The Buffett Partnerships achieved an outstanding degree of performance, even by modern era standards. According novelinvestor.com from 1957-1968, the partnerships earned a 31.6% annual return with no losing years. Beating the Dow every year by over 300%, at 9.1% per year.
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