Calling it "a whole world of investments" is a little extreme. Access to almost all asset classes is available for even the smallest of investors.
Absent a mysterious Renaissance-like trading algorithm that magically prints out-performance, diversification is the only free lunch, and it's cheap and easy to massively diversify these days.
I mean there are lots of funds/managers you can only invest with if you have a few hundred million to play with. Sure, they invest in the same asset classes you do except in theory they do it way better.
I don't understand why people parrot this sentiment all the time. Lots of crappy startups hand out worthless equity -- would you say "most tech stocks aren't worth anything"? Sure there are bad investment firms out there and those don't tend to last very long. There are many firms which handily beat the market, they wouldn't be around if they didn't.
You would think so, but taking into account fees, there are actually ZERO funds that beat the market over a 30 year period. You can research this on morningstar. Maybe there are some super secret private funds out there that beat the market over the long period (Madoff's fund was one of them).
So ya, you would think they wouldn't stay in business, but marketing and complexity is powerful.
Their best trick is to hold a ton of funds in their portfolio then show you the ones that have had a good run the last 10 years. Then of course a different ten in a few years. Hold enough assets in enough configurations and of course you will have some winners over shorter periods of time. But good luck guessing which ones.
Where are you getting your data from? Most well-respected shops don't publish their returns publicly. It's kind of an Occam's Razor thing -- is the entire trillion dollar investment industry really run on hopes/dreams/unicorn tears or is it more likely that the guy on HN who read an article from Warren Buffet not actually an expert on the industry?
I wasn't aware that Morningstar had publicly available hedge fund performance data. What do they show for Renaissance's Medallion Fund over the last 29 years?
It of course doesn't have hedge funds, which are black box. And Renaissance is the "blackest". I find it suspicious that the only funds with long term performance that "beats the market" are unpublished and secret. Madoff's fund was on of the few that beat the market consistently too.
Absent a mysterious Renaissance-like trading algorithm that magically prints out-performance, diversification is the only free lunch, and it's cheap and easy to massively diversify these days.