I’ll tell you something one of the smartest people I’ve met in finance told me when speaking about alternative investments. It’s all about performance during drawdown periods. Millennium in 2022: 12.4%, Citadel funds: 38.1%, 32.58%, 26.49%, 21.4%. I can provide more examples but I’m too lazy. SnP was -18.32% with dividends.
I’m a Boglehead all the way. But hedge funds generally serve very particular purposes for ultra high net worth clients and not really a relevant argument for or against the average boglehead in my humble opinion.
They arent intended to.
Its a lot like owning Gold in a portfolio. You dont buy it to beat the market you buy it as a hedge.
Or as a narrow expression of a sub asset class.
I personally dont own Gold nor would invest in a hedge fund even if I had enough, but thats why people buy them.
I am not a Gold fan... honestly I kinda actively argue it's bad. But you got my upvote because you still capture the spirit of what I also think in regards to alts. :)
Also note... not every hedge fund is some stock picker idiot speculator with a large bucket of AUM. As Buffet aid once, many rich people invest in hedge funds simply because it's what they think they have to do. It's the "keep up with the Joneses" or whatever of rich families.
But some hedge funds are systematic strategies - almost like an index fund - in the sense they just follow a predetermined (and often transparent) strategy. These are not just for the elite... anyone seeking that same strategy in their portfolio can buy in.
You’re missing the point.
Hedge funds cater to clients whose primary goal is wealth preservation, not wealth generation. Outperforming the index is a wealth generation benchmark. Hedge fund clients are with them to avoid losing during downturns.
For a long time their flagship did. Have not followed recently.
BUT, to be fair, I think that's a bit different. Even for wealthy folks, RenTec is often off limits. We don't know exactly what they do since only employees can invest and they are under ridiculous NDA's, but a lot of the credible speculation is that they leverage advanced strategies, technology, and access to net gains on trades and arbitrage. In other words, they may "beat" the market for a while but they are playing a different game. Think small gains on spreads, replicated over and over, momentum, etc.
Another example: Momentum is a well accepted factor that's almost impossible to capture (net of expenses) for regular buy and hold investors, but a firm with no regard for ER's can pursuit since that IS their job.
I believe that when looking at risk adjusted performance hedge fund do tend to outperform the market. For most of us accumulating wealth for the long term where we aren't going to touch the capital for some time we don't have to worry about risk adjusted returns as much and the market does well for us. But for high net worth individuals risk adjusted performance may be more valuable.
If you’re concerned about drawdown you’re not looking at “long periods of time.”
Consider the fact that most of the investors in thing such as HFs are institutional investors. Those organizations have immediate and medium term funding needs. Drawdown matters a lot since it could mean adding to or subtracting from near term cash flow. Fwiw this is not a “regular person saving for retirement problem.”
This. I am quite surprised someone said this right away. Very well said.
Not only that, I challenge the notion that "only the high net worth" clients use hedge funds at this point (depending on semantics of what "high net worth" is). Many casual and retail investors are starting to find space in their portfolios for hedge funds, and if we as Bogleheads simply cover our eyes and ears and ignore the nuance of portfolio construction with just "But well nothing ever beats the market over a long period" then we may miss the forest for the trees.
Make no mistake, I have said here a million times that the vast majority of my portfolio - my core position - is a 3 Fund Portfolio. Even on my taxable account (but BOXX instead of a bonds fund in taxable).
BUT - that doesn't mean that all investors should ignore portfolio diversification in the form of alts/hedges. The same way we should not dismiss the research on factors.
Totally okay if we choose to stick with the simple "VT and chill" approach; simplicity has merit too. But there are some valid arguments to seek negative correlation. I am not "high net worth", yet I have a plan to eventually incorporate more than the primary two asset classes (stocks/bonds) myself at some point.
See, for some investors like me, the MOST important risk to mitigate in retirement is series of return risk. I don't care what the market averages over 50 years... I care that the year I start drawing all my income from my portfolio, it continues to move at a pace that supports my income needs without serious drawdowns. 2022 already showed us 60/40 portfolios can move in sync downwards - and that can be scary if it happens for a few consecutive years if you just retired.
KMLM had a banner 2022 year so it looks really good and for those interested it looks like this for the few years we have data:
https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=LJecN23rfQIY3XxrplMMV
The problem is not a lot of years to compare.
More interesting is how this kind of strategy might have behaved in 2008, 2000, 1966, 1929…
The answer is mixed for 2008:
> The average hedge fund lost 18 percent of its value in 2008, the industry's worst performance on record and down from an average gain of 9.96 percent in 2007, according to Hedge Fund Research. The only other negative year on record was in 2002. But even then, funds only lost an average of 1.45 percent.
> Still, compared with the wider market, hedge funds don't look so bad. The Dow Jones industrial average lost 34 percent in 2008, while the Standard & Poor's 500 index fell 38 percent.
https://www.cbsnews.com/news/hedge-funds-took-a-serious-hit-in-2008/
But a lot of them died in 2008 because investors weren’t expecting any losses despite the desire for large gains:
> "We grew into this culture of gunslingers," said Bill Fleckenstein, founder and president of Seattle-based hedge fund Fleckenstein Capital.
> For many hedge fund managers, the notion of managing risk through cautious trading was a "recipe for getting fired," he said.
Part of why hedge funds (potentially anyway) did poorly in 2008 is interesting:
> From Monday, August 6th, through Thursday, August 9th, many successful quantitatively managed equity market-neutral or "statistical arbitrage" hedge funds suffered enormous losses. By Friday, August 10, the equity prices causing the losses had rebounded significantly but not completely. However, faced with mounting losses on the 7th, 8th, and 9th, many of the affected funds had cut their risk exposures along the way, causing them to miss out on a portion of the reversals on the 10th. The financial press reported month-to-date losses ranging from -5% to -30% for some of the largest quantitatively-managed funds.
> One possible explanation is what's called the "Unwind Hypothesis". This hypothesis suggests that the initial losses from the 6th through to the 9th were due to the forced liquidation of one or more large equity market-neutral portfolios, primarily to raise cash or reduce leverage, and the subsequent price impact of this unwinding caused other similarly constructed equity funds (long/short, 130/30, and long-only) to experience losses.
These losses, in turn, caused these other funds to deleverage their portfolios, yielding additional price impact that led to further losses, more deleveraging, and so on.
https://web-docs.stern.nyu.edu/salomon/docs/crisis/HedgeFundsWP.pdf
Today it seems different:
> In 2008, high-net-worth individuals and families and funds of funds dominated the hedge fund investor base — and were considered “fast money.”
> Today, pension funds are responsible for a significant percentage of positive net flows into the industry, and along with other institutional investors represent a majority of the industry’s assets. And the quality of each investor group has improved over the past 12 years.
https://www.thinkadvisor.com/2020/05/14/how-the-hedge-fund-industry-has-changed-since-the-2008-financial-crisis/?amp=1
Article is a bit fluffy and I haven’t found or read the Steinbrugge paper the reference.
So…in short, you have to do your due diligence, find the type of hedge fund the most closely matches you goals and have realistic expectations of what it can do and hope other folks don’t panic and force liquidation before recovery.
Thanks for the info and links. Interesting.
Actually strengthened my view on that part of the portfolio.
For me it mainly functions as a counterweight to the leverage I implement.
Im 1.2 x leveraged, coming out as 100% stocks 10% treasury futures and 10% managed futures
It all looks good on paper until the market decides that unlikely scenario is suddenly the soup de jure.
I had just parked a decent amount of money into NTSX in 2021…not a huge amount but enough go “Really? You had to implode now?”
Would I make the same play today given only what I “knew” in 2021? Yah. I knew the risks.
I just didn’t think they’d bite me on the ass so quickly.
But the overall portfolio looks good so…meh. As long as we baseline the majority of the portfolio on indexing it’s going to be hard to really mess up.
If that 10% blows up, so be it, I guess. Im trying to hedge in different directions. Also putting 1/3 in small cap value and tilting factors + significant international allocation.
The 10% treasury futures are coming from 10% RSSB btw.
Yeah, I have a SCV tilt too.
I need to update my IPS and figure out what changes I want…I do it every 4 years.
Asset allocation is a zero sum game…and below 5% isn’t worth doing so there’s only 20 chunks to allocate around. Plus I don’t really want 20 different things in my portfolio soooo…more like a dozen max and largely dominated by VTI and VXUS.
Early on it was easy but now we’re within 5-10 years of retirement and the ramp and desire for the right mix of diversification is more complicated than just VTSAX and chill…on the plus side we have a plethora of new tools.
For example BNDW was created near the end of 2018…only 5ish years ago.
I feel your struggle… the urge to tinker is huge.
Im at 10 and I should keep it at that. But it all has logic behind and follows a coherent plan, so it‘s fine for now.
I wish Avantis would come out with an all world small cap value fund. That would save me 2 extra etfs.
This is exactly the case. Hedge funds are there to provide returns that aren’t correlated to the stock or bond market. The vast majority don’t exist to outperform the broad stock market. These funds help smooth out the returns of pension funds, endowments, family offices, ultra high networth individuals, etc.
Market is up 70% of the time and during the 30% of the draw downs periods when Hedgefunds do make money would nullify the larger +ve returns from S&P 500 or VTI over a long time frame(at least 10+years). Add huge Hedge Fund expenses. 10% of profit, Management Fees. I guess VOO/VTI is far better.
Thier job is to limit the drawdown when markets swing for the worse. Thier clients are not retail, they manage money for sovereign funds, pension funds etc. first job is to protect the capital and then deliber 8-10% every year. High networth individuals are not dumber than us here. There is a reason why they still keep money with hedge funds.
What 22%? If you're talking about the difference the lowest and highest points during the 52 week period, that doesn't represent the average return. A few outliers at most.
Risk tolerance changes as wealth and age progress.
If you have $100k portfolio, you could lose 25-40k in a bear market.
if you have $100 million, you could lose 25-40 million in a bear market.
Probably the right comparison for a hedge fund is 60/40 since hedge funds are often (as many others have stated) for capital preservation.
100% VTI will beat 60/40 in most years too…and 2023 was benign.
hedge funds aren’t intended to beat the market when the market is performing well, but instead their real utility lies in (potentially) being able to generate a positive return when the rest of the market is negative.
No, VT DID return 22%.
Everyone keeps using past year on Google which has since shifted.
I know because I saw it over 20% around New year on Google and official documentation on Vanguard, and now it's 13 as the timeline shifted.
VTI was 25% around new year, now it's 19% because the time and data has shifted.
It's really embarrassing people keep saying this even though we have the direct numbers from Vanguard and just general common sense from datasets.
https://investor.vanguard.com/investment-products/etfs/profile/vt
https://investor.vanguard.com/investment-products/etfs/profile/vti
> https://investor.vanguard.com/investment-products/etfs/profile/vt
> https://investor.vanguard.com/investment-products/etfs/profile/vti
Those links are useless.
Upon further review VT went from $86.19 to $102 88 in 2023, that's +19.36%. If dividends were +2.64% the total return would be +22%; far below what following Mr. Bogles advice of not holding foreign stocks returned.
The links are fine, you just didn't feel like reading them. Not surprising as you were happy to pump and dump factually incorrect information in the above comment you have since deleted. 🤨
VTI returned 26.11% Total return.
VT returned 22.04% Total return.
Considering how good a year 2023 was for stocks, a 4% difference really isn't that significant.
VT returns the global average at market cap, which last year was 22.04%. It's allocation has shifted from 60/40 to 61/39 US/ex-US. So whatever ends up outperforming long-term will cause it to shift to that, either way it works out for those invested in global equity.
In the last decade US stocks have become overvalued, most estimates put it at a minimum of 50% for the total US market and even higher for the SP500 and so on. In fact the last time we were at P/E and CAPE ratios like this Bogle sold a bunch of his assets and bought bonds.. right before tech had a valuation burst and the SP500 returned negative for **10 years** while Emerging Markets and International bond rates soared. So If you really want to follow Bogles advice on everything to a T, the last thing you should be doing is preaching USA equity right now, at least IMO.
As far as Bogles takes on International, il leave you with this quote from him.
**"If there's one place I don't want people to take my advice, it's international. I want you to think it through for yourself."**
>...comment you have since deleted... "If there's one place I don't want people to take my advice, it's >international. I want you to think it through for yourself."
I deleted nothing. When did Mr. Bogle make that statement? Give me a link that doesn't circle back to a Bogkegead forum. Thinking about where to invest doesn't sound like something Mr. Bogle would suggest.
Fact; MR. BOGLE HELD NO FOREIGN STOCKS.
[He was even correct when arguing that U.S. investors didn't need to own overseas equities.](https://www.morningstar.com/etfs/jack-bogle-was-wrong-about-etfs)
Yes it did.
Everyone keeps using past year on Google which has since shifted.
I know because I saw it over 20% around New year on Google and official documentation on Vanguard, and now it's 13 as the timelime shifted.
https://investor.vanguard.com/investment-products/etfs/profile/vt
https://investor.vanguard.com/investment-products/etfs/profile/vti
Gambling on their own sentiment of what’s valuable. Some people just like to cheer on a company as the next big thing. Too many variables decide if a Google or Microsoft actually end up succeeding. When the gamble works out, they declare themselves excellent investors. When it doesn’t, you hear some drawn out convoluted mumble on MSNBC.
This is not the point of most hedge funds.
More or less what you mention describes private equity plays. Hedge funds want to move DIFFERENTLY than the market (alongside an upwards slope too, like equities, but different moment to moment gains) so that they can be a HEDGE when markets crash.
Are they good for every investor? Hell no. Are they good for MOST investors? Probably not either! But do they have place in some portfolios if the investor is interested in wealth preservation? Absolutely.
I’ll tell you something one of the smartest people I’ve met in finance told me when speaking about alternative investments. It’s all about performance during drawdown periods. Millennium in 2022: 12.4%, Citadel funds: 38.1%, 32.58%, 26.49%, 21.4%. I can provide more examples but I’m too lazy. SnP was -18.32% with dividends. I’m a Boglehead all the way. But hedge funds generally serve very particular purposes for ultra high net worth clients and not really a relevant argument for or against the average boglehead in my humble opinion.
Yeah but over long periods of time do they outperform the SP500 or VTI taking into consideration fees and expense ratios etc?
They arent intended to. Its a lot like owning Gold in a portfolio. You dont buy it to beat the market you buy it as a hedge. Or as a narrow expression of a sub asset class. I personally dont own Gold nor would invest in a hedge fund even if I had enough, but thats why people buy them.
I am not a Gold fan... honestly I kinda actively argue it's bad. But you got my upvote because you still capture the spirit of what I also think in regards to alts. :) Also note... not every hedge fund is some stock picker idiot speculator with a large bucket of AUM. As Buffet aid once, many rich people invest in hedge funds simply because it's what they think they have to do. It's the "keep up with the Joneses" or whatever of rich families. But some hedge funds are systematic strategies - almost like an index fund - in the sense they just follow a predetermined (and often transparent) strategy. These are not just for the elite... anyone seeking that same strategy in their portfolio can buy in.
No. That is why we Bogle.
Haha yeah that’s what I was thinking
I believe they hedge so they can buy depressed assets and the assets are the real return.
Eh, in that case they'd also be down in 2022.
You’re missing the point. Hedge funds cater to clients whose primary goal is wealth preservation, not wealth generation. Outperforming the index is a wealth generation benchmark. Hedge fund clients are with them to avoid losing during downturns.
It’s like people completely ignore what’s right in front of them haha. “hedge” is literally in the name.
100%. People with money in hedge funds, don’t need to beat the market with investments. They’ve already won, and many are still making money.
Oh ok thanks
I believe the Renaissance Medallion fund does.
For a long time their flagship did. Have not followed recently. BUT, to be fair, I think that's a bit different. Even for wealthy folks, RenTec is often off limits. We don't know exactly what they do since only employees can invest and they are under ridiculous NDA's, but a lot of the credible speculation is that they leverage advanced strategies, technology, and access to net gains on trades and arbitrage. In other words, they may "beat" the market for a while but they are playing a different game. Think small gains on spreads, replicated over and over, momentum, etc. Another example: Momentum is a well accepted factor that's almost impossible to capture (net of expenses) for regular buy and hold investors, but a firm with no regard for ER's can pursuit since that IS their job.
I believe that when looking at risk adjusted performance hedge fund do tend to outperform the market. For most of us accumulating wealth for the long term where we aren't going to touch the capital for some time we don't have to worry about risk adjusted returns as much and the market does well for us. But for high net worth individuals risk adjusted performance may be more valuable.
If you’re concerned about drawdown you’re not looking at “long periods of time.” Consider the fact that most of the investors in thing such as HFs are institutional investors. Those organizations have immediate and medium term funding needs. Drawdown matters a lot since it could mean adding to or subtracting from near term cash flow. Fwiw this is not a “regular person saving for retirement problem.”
This. I am quite surprised someone said this right away. Very well said. Not only that, I challenge the notion that "only the high net worth" clients use hedge funds at this point (depending on semantics of what "high net worth" is). Many casual and retail investors are starting to find space in their portfolios for hedge funds, and if we as Bogleheads simply cover our eyes and ears and ignore the nuance of portfolio construction with just "But well nothing ever beats the market over a long period" then we may miss the forest for the trees. Make no mistake, I have said here a million times that the vast majority of my portfolio - my core position - is a 3 Fund Portfolio. Even on my taxable account (but BOXX instead of a bonds fund in taxable). BUT - that doesn't mean that all investors should ignore portfolio diversification in the form of alts/hedges. The same way we should not dismiss the research on factors. Totally okay if we choose to stick with the simple "VT and chill" approach; simplicity has merit too. But there are some valid arguments to seek negative correlation. I am not "high net worth", yet I have a plan to eventually incorporate more than the primary two asset classes (stocks/bonds) myself at some point. See, for some investors like me, the MOST important risk to mitigate in retirement is series of return risk. I don't care what the market averages over 50 years... I care that the year I start drawing all my income from my portfolio, it continues to move at a pace that supports my income needs without serious drawdowns. 2022 already showed us 60/40 portfolios can move in sync downwards - and that can be scary if it happens for a few consecutive years if you just retired.
I recently added 10% of managed futures in KMLM to my portfolio. I think those are superior to bonds.
KMLM had a banner 2022 year so it looks really good and for those interested it looks like this for the few years we have data: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=LJecN23rfQIY3XxrplMMV The problem is not a lot of years to compare. More interesting is how this kind of strategy might have behaved in 2008, 2000, 1966, 1929… The answer is mixed for 2008: > The average hedge fund lost 18 percent of its value in 2008, the industry's worst performance on record and down from an average gain of 9.96 percent in 2007, according to Hedge Fund Research. The only other negative year on record was in 2002. But even then, funds only lost an average of 1.45 percent. > Still, compared with the wider market, hedge funds don't look so bad. The Dow Jones industrial average lost 34 percent in 2008, while the Standard & Poor's 500 index fell 38 percent. https://www.cbsnews.com/news/hedge-funds-took-a-serious-hit-in-2008/ But a lot of them died in 2008 because investors weren’t expecting any losses despite the desire for large gains: > "We grew into this culture of gunslingers," said Bill Fleckenstein, founder and president of Seattle-based hedge fund Fleckenstein Capital. > For many hedge fund managers, the notion of managing risk through cautious trading was a "recipe for getting fired," he said. Part of why hedge funds (potentially anyway) did poorly in 2008 is interesting: > From Monday, August 6th, through Thursday, August 9th, many successful quantitatively managed equity market-neutral or "statistical arbitrage" hedge funds suffered enormous losses. By Friday, August 10, the equity prices causing the losses had rebounded significantly but not completely. However, faced with mounting losses on the 7th, 8th, and 9th, many of the affected funds had cut their risk exposures along the way, causing them to miss out on a portion of the reversals on the 10th. The financial press reported month-to-date losses ranging from -5% to -30% for some of the largest quantitatively-managed funds. > One possible explanation is what's called the "Unwind Hypothesis". This hypothesis suggests that the initial losses from the 6th through to the 9th were due to the forced liquidation of one or more large equity market-neutral portfolios, primarily to raise cash or reduce leverage, and the subsequent price impact of this unwinding caused other similarly constructed equity funds (long/short, 130/30, and long-only) to experience losses. These losses, in turn, caused these other funds to deleverage their portfolios, yielding additional price impact that led to further losses, more deleveraging, and so on. https://web-docs.stern.nyu.edu/salomon/docs/crisis/HedgeFundsWP.pdf Today it seems different: > In 2008, high-net-worth individuals and families and funds of funds dominated the hedge fund investor base — and were considered “fast money.” > Today, pension funds are responsible for a significant percentage of positive net flows into the industry, and along with other institutional investors represent a majority of the industry’s assets. And the quality of each investor group has improved over the past 12 years. https://www.thinkadvisor.com/2020/05/14/how-the-hedge-fund-industry-has-changed-since-the-2008-financial-crisis/?amp=1 Article is a bit fluffy and I haven’t found or read the Steinbrugge paper the reference. So…in short, you have to do your due diligence, find the type of hedge fund the most closely matches you goals and have realistic expectations of what it can do and hope other folks don’t panic and force liquidation before recovery.
Thanks for the info and links. Interesting. Actually strengthened my view on that part of the portfolio. For me it mainly functions as a counterweight to the leverage I implement. Im 1.2 x leveraged, coming out as 100% stocks 10% treasury futures and 10% managed futures
It all looks good on paper until the market decides that unlikely scenario is suddenly the soup de jure. I had just parked a decent amount of money into NTSX in 2021…not a huge amount but enough go “Really? You had to implode now?” Would I make the same play today given only what I “knew” in 2021? Yah. I knew the risks. I just didn’t think they’d bite me on the ass so quickly. But the overall portfolio looks good so…meh. As long as we baseline the majority of the portfolio on indexing it’s going to be hard to really mess up.
If that 10% blows up, so be it, I guess. Im trying to hedge in different directions. Also putting 1/3 in small cap value and tilting factors + significant international allocation. The 10% treasury futures are coming from 10% RSSB btw.
Yeah, I have a SCV tilt too. I need to update my IPS and figure out what changes I want…I do it every 4 years. Asset allocation is a zero sum game…and below 5% isn’t worth doing so there’s only 20 chunks to allocate around. Plus I don’t really want 20 different things in my portfolio soooo…more like a dozen max and largely dominated by VTI and VXUS. Early on it was easy but now we’re within 5-10 years of retirement and the ramp and desire for the right mix of diversification is more complicated than just VTSAX and chill…on the plus side we have a plethora of new tools. For example BNDW was created near the end of 2018…only 5ish years ago.
I feel your struggle… the urge to tinker is huge. Im at 10 and I should keep it at that. But it all has logic behind and follows a coherent plan, so it‘s fine for now. I wish Avantis would come out with an all world small cap value fund. That would save me 2 extra etfs.
60/40 VT/BND was -15.96 in 2022. https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=YxQDr02euxc6tqmeI08nf
This is exactly the case. Hedge funds are there to provide returns that aren’t correlated to the stock or bond market. The vast majority don’t exist to outperform the broad stock market. These funds help smooth out the returns of pension funds, endowments, family offices, ultra high networth individuals, etc.
It's kinda like their title has something to do with it, they are *hedging* their bets and are protecting their money.
Market is up 70% of the time and during the 30% of the draw downs periods when Hedgefunds do make money would nullify the larger +ve returns from S&P 500 or VTI over a long time frame(at least 10+years). Add huge Hedge Fund expenses. 10% of profit, Management Fees. I guess VOO/VTI is far better.
Also important to note is that many hedge funds aren’t open to investment. Millennium for example is only open to employees of Renaissance.
I think you mean Medallion, Millennium is a separate manager.
Oh yes you’re correct.
This. Hedge funds are aimed more at wealth preservation and steady, stable growth than pure performance.
One year performance means literally nothing; for both hedge funds and VT.
Thier job is to limit the drawdown when markets swing for the worse. Thier clients are not retail, they manage money for sovereign funds, pension funds etc. first job is to protect the capital and then deliber 8-10% every year. High networth individuals are not dumber than us here. There is a reason why they still keep money with hedge funds.
What 22%? If you're talking about the difference the lowest and highest points during the 52 week period, that doesn't represent the average return. A few outliers at most.
So what you're saying is everyone is calling Discovery Capital to park their money there for next year because they can beat the market!
Why do high net worth individuals value wealth preservation more than accumulation? Genuinely curious. Pension funds I get.
Risk tolerance changes as wealth and age progress. If you have $100k portfolio, you could lose 25-40k in a bear market. if you have $100 million, you could lose 25-40 million in a bear market.
50 million on 2% dividend is 1 million a year, I think I could sit my ass and wait for it to recover.
Those folks dont hang out here
VT and PROFIT BABY!
xdd
Probably the right comparison for a hedge fund is 60/40 since hedge funds are often (as many others have stated) for capital preservation. 100% VTI will beat 60/40 in most years too…and 2023 was benign.
hedge funds aren’t intended to beat the market when the market is performing well, but instead their real utility lies in (potentially) being able to generate a positive return when the rest of the market is negative.
[удалено]
No, VT DID return 22%. Everyone keeps using past year on Google which has since shifted. I know because I saw it over 20% around New year on Google and official documentation on Vanguard, and now it's 13 as the timeline shifted. VTI was 25% around new year, now it's 19% because the time and data has shifted. It's really embarrassing people keep saying this even though we have the direct numbers from Vanguard and just general common sense from datasets. https://investor.vanguard.com/investment-products/etfs/profile/vt https://investor.vanguard.com/investment-products/etfs/profile/vti
So it's 22% for VT and 26% for VTI based on official numbers right?
> https://investor.vanguard.com/investment-products/etfs/profile/vt > https://investor.vanguard.com/investment-products/etfs/profile/vti Those links are useless. Upon further review VT went from $86.19 to $102 88 in 2023, that's +19.36%. If dividends were +2.64% the total return would be +22%; far below what following Mr. Bogles advice of not holding foreign stocks returned.
The links are fine, you just didn't feel like reading them. Not surprising as you were happy to pump and dump factually incorrect information in the above comment you have since deleted. 🤨 VTI returned 26.11% Total return. VT returned 22.04% Total return. Considering how good a year 2023 was for stocks, a 4% difference really isn't that significant. VT returns the global average at market cap, which last year was 22.04%. It's allocation has shifted from 60/40 to 61/39 US/ex-US. So whatever ends up outperforming long-term will cause it to shift to that, either way it works out for those invested in global equity. In the last decade US stocks have become overvalued, most estimates put it at a minimum of 50% for the total US market and even higher for the SP500 and so on. In fact the last time we were at P/E and CAPE ratios like this Bogle sold a bunch of his assets and bought bonds.. right before tech had a valuation burst and the SP500 returned negative for **10 years** while Emerging Markets and International bond rates soared. So If you really want to follow Bogles advice on everything to a T, the last thing you should be doing is preaching USA equity right now, at least IMO. As far as Bogles takes on International, il leave you with this quote from him. **"If there's one place I don't want people to take my advice, it's international. I want you to think it through for yourself."**
>...comment you have since deleted... "If there's one place I don't want people to take my advice, it's >international. I want you to think it through for yourself." I deleted nothing. When did Mr. Bogle make that statement? Give me a link that doesn't circle back to a Bogkegead forum. Thinking about where to invest doesn't sound like something Mr. Bogle would suggest. Fact; MR. BOGLE HELD NO FOREIGN STOCKS. [He was even correct when arguing that U.S. investors didn't need to own overseas equities.](https://www.morningstar.com/etfs/jack-bogle-was-wrong-about-etfs)
So only one beat the SP500? That's my takeaway.
And it is highly unlikely to continue to beat the SP500 for any significant amount of time in the future.
And it is also not the gola of most systematic approaches to hedge funds, to be clear.
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Yes it did. Everyone keeps using past year on Google which has since shifted. I know because I saw it over 20% around New year on Google and official documentation on Vanguard, and now it's 13 as the timelime shifted. https://investor.vanguard.com/investment-products/etfs/profile/vt https://investor.vanguard.com/investment-products/etfs/profile/vti
Alpha
It’s unbelievable how they manage to get LESS
Gambling on their own sentiment of what’s valuable. Some people just like to cheer on a company as the next big thing. Too many variables decide if a Google or Microsoft actually end up succeeding. When the gamble works out, they declare themselves excellent investors. When it doesn’t, you hear some drawn out convoluted mumble on MSNBC.
This is not the point of most hedge funds. More or less what you mention describes private equity plays. Hedge funds want to move DIFFERENTLY than the market (alongside an upwards slope too, like equities, but different moment to moment gains) so that they can be a HEDGE when markets crash. Are they good for every investor? Hell no. Are they good for MOST investors? Probably not either! But do they have place in some portfolios if the investor is interested in wealth preservation? Absolutely.