| " then why should the PE class beat the S&P" It's a matter of perception. PE is generally viewed as advantageous because they have less strings attached, and do more, have the best teams in the business, huge political access (massive political figures on funds boards). They do post higher returns. Most people think they do, and they charge higher fees. But if you risk adjust those returns, they're not doing anything. Literally nothing if they can't beat the S&P consistently. Here's the problem: the 2+20. If PE managers are getting 2% for managing and 20% of the upside, then, well, you might as well just stick your money in the S&P and save all that. Given those higher management fees, PE is actually a money loser. Just hustlers. It might very well be something else altogether once you look at the industry, it could be some funds are just crap, some are consistently great - and it boils down to the ability of fund sales people to make deals. So if there are a lot of crap funds with good sales staff ... this will drag the average down. Maybe the good PE firms are actually good :) |
They get a special tax break on top of it!