Soros: Why Hedge Funds Can’t Beat Market (Hint: Fees)

 “Since hedge funds are now a dominant force in the market, they can’t, as a group, outperform the market,” Soros said today in a Bloomberg Television interview with Erik Schatzker from the World Economic Forum in Davos, Switzerland. The funds’ fees, typically 2 percent of assets and 20 percent of returns, eat into profits, Soros said.

.Hedge-fund performance will also be impeded because managers and investors are reluctant to take risks, Soros said.  “Outperforming the market with low volatility on a consistent basis is an impossibility,” said Soros, 82. “I outperformed the market for 30-odd years, but not with low volatility.”

A little background:  Soros’s hedge fund operated until 2011, when he turned New York-based Soros Fund Management LLC into a family office that now oversees $24 billion. He averaged returns of about 20 percent a year since 1969 at the firm and its predecessor

http://www.bloomberg.com/news/2013-01-25/soros-says-hedge-funds-can-t-beat-market-because-of-fees.html