“The firm’s biggest fund, Spectrum, has earned an annual average return of 9.4% net of fees since 2004.”
The S&P 500 has averaged 9% for 80 years. Joe Blow can buy index fund and do just as well as the quant clients. Sure, these guys are averaging 14% before fees, and it’s a great way to get rich. But after fees the client might as well just passively invest.
You need to consider the following elements:
-You compare the S&P and two Six Sigma funds over different timelines. The index yielded much less than 9% on 2004-2015 (you can halve the performance).
-What’s the common feature between: the S&P, the formal idea of passive indexing, and the emergence of passive investment funds? None of them are 80 years old.
-Retail customers (Joe Blow) rarely have access to hedge fund products directly (they might still be exposed through pension funds, sovereign wealth funds, etc. but it makes the allocation change almost out of their hands).
-Stating performance figures alone is mostly a Bloomberg-reader thing. In practice, there is usually at least an attempt to incorporate some kind of risk measure when selecting hedge funds.
I am not even anti-passive funds but you are memeing a bit too hard.
“The firm’s biggest fund, Spectrum, has earned an annual average return of 9.4% net of fees since 2004.”
The S&P 500 has averaged 9% for 80 years. Joe Blow can buy index fund and do just as well as the quant clients. Sure, these guys are averaging 14% before fees, and it’s a great way to get rich. But after fees the client might as well just passively invest.