Its only become clear lately that most managed funds don't out perform index funds.
No matter your trade, if you are smart you want to be paid for your time invested into something and get some upside, regardless of what you are doing for a profession.
Some funds take years to show a return, would you develop software for years and build the business for it without drawing a salary for that work? Most people can't afford to try.
Most folks in finance who can raise this kind of money for a fund can simply make money doing something else, like raising money for established businesses in investment banking. Give the market has shown this model is dead now they will.
> Its only become clear lately that most managed funds don't out perform index funds.
Malkiel's A Random Walk Down Wall Street, in which he explains the Efficient Market Hypothesis and argues that active managers can't consistently outperform the market, was first published in 1973.
So, it might only recently have entered common knowledge, but the evidence has been piling up for a while.
No matter your trade, if you are smart you want to be paid for your time invested into something and get some upside, regardless of what you are doing for a profession.
Some funds take years to show a return, would you develop software for years and build the business for it without drawing a salary for that work? Most people can't afford to try.
Most folks in finance who can raise this kind of money for a fund can simply make money doing something else, like raising money for established businesses in investment banking. Give the market has shown this model is dead now they will.