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When I’m not reading magazines in the supermarket checkout line, I tend toward trade journals like “Pensions & Investments” — a font of juicy industry gossip of interest to people in my business. I enjoy sharing what I’m able to glean from these scandal sheets, so here goes…

While hedge funds have been the whipping boy of the industry in recent years, that has not stopped the flow of money into this arcane subset of financial services. Warren Buffett’s bet that the manager of a “fund of funds” would not beat the S&P 500 over a 10-year period turned out to be a winner — for Mr. Buffett. So what explains why hedge funds for the past two years have enjoyed increased assets under management, thanks to a positive flow of new money?

A list of the largest 115 hedge funds, representing $1.2 trillion in assets under management, indicates that not many of the nation’s trustees of pension funds and college endowments paid much attention to the outcome of the Warren Buffett bet. Moreover, it is a lucrative industry with a traditional cost structure of “2 and 20” which means a 2 percent annual administrative fee and 20 percent of annual profits (with no credit offered in years in which they lose money).

Still, the idea of a successful hedge fund is attractive to trustees responsible for vast amounts of money because in years when the stock market is, shall we say, “less cooperative,” the trustees want some protection against the downside, and this is what a hedge fund purports to offer.

Some apparently have had enviable track records. The largest fund, Bridgewater Associates, manages $123 billion — an amount far above that of No. 2 on the list, which is AQR Capital management with a paltry $76 billion. Ray Dalio, the founder of Bridgewater and author of a new book, “Principles,” is interviewed and shares some insight into how his company gained some traction.

Interestingly enough, he talks about the concept of investing in asset classes whose returns tend to be “inversely co-related” such that when one is a loser, it will be offset by another winner. The net effect is a composite result represented more like a straight line than would be the line for any single investment of the collection.

Back in 1990, this came as news to Kodak, whose pension decision-makers were searching for a technique that would enable them to reduce risk while still capitalizing on the long-term expected gains of stocks. According to Mr. Dalio, selling his service to Kodak marked the beginning of his money-management business. Of course, his firm added a veneer of research over an otherwise simplistic concept to differentiate itself from so many others doing essentially the same thing.

Does any of this sound familiar? Readers of this column just four weeks ago were treated to an explanation of what happens when four basic asset classes are combined to include large domestic stocks, foreign stocks, commodities and real estate. I suggested a “do-it-yourself” approach that accomplished much the same results. The chances are reasonably good that the results will be as good as Mr. Dalio’s — especially when results include the value of “free” management instead of “2 and 20.”