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Many individual investors choose hedge funds because of their high returns but with those high returns come high fees and are they worth that.
And hate -- high returns they don't really exist right now.
This year they made five point 5% compared to the S&P 500 if -- just invested in an index fund he would've made 16%.
Here to help me now.
Investment manager an equity analyst Hilary Kramer she's the author of the little -- big profits from small stocks great book by the -- welcome back -- of.
I'm here I don't things were supposed to be the Smart guys -- to hedge fund managers used to be the Smart ones.
Now they're ink in bureaucratic in the big pension funds have billions of dollars to invest so these -- become.
Being incorporated bureaucracies.
That charged 2% of the assets under management and -- 20% of what efforts many supplies.
The whole problem here is if a hedge fund loses money it doesn't matter he did managers and hedge -- still make 2%.
And let me tell you Gerri we all about -- so it's all American money.
-- its corporate pension funds it's lever pension funds.
It's it's it's it's cut trees you couldn't hire at a black box because we really don't know what's going that's right they have -- right they're not very public about what they DO button and then leverage up that's the other part of it as an individual investor you could take a chance to invest in the stock.
And the hedge fund for every dollar they invest they could be and they could be barring three dollars ten dollars actually had.
A whole financial crisis and a meltdown hedge funds can blow up -- that manager can move on also some of the top hedge fund managers -- become more like marketers.
And they've left the stock picking go down to very very junior ranks and there's nothing like -- Syrians when it comes to Wall Street and investing well that's true so what would you tell people who are interesting -- interest in investing in hedge fund.
I would say you're much better off using the -- parents see.
Of that of the Internet to be able to check -- see.
What are hedge funds buying into hedge funds have to disclose their large stakes in in companies when they make investments today.
We heard at Citadel investing in -- star.
And so you can follow -- long as an investor and make your own decisions.
-- the hedge funds they can also get caught in -- -- there's so much ego right and we know you have to have Condo on Wall Street.
Touch -- -- -- -- any any and you have to have cool head.
And you have to be able to take a loss nice hedge fund manager just keep piling in they won't admit when they make a mistake -- right we're gonna have to have a hedge fund manager now -- -- to adopt their side have read but I look a little bit about something you say they don't typically spend a lot of time thinking about and that small cap stocks.
Now as you know we had a big move in the markets this week small cap stocks did fantastically.
Well what do you like right now.
Some of that the small cap insurance companies are really really attractive because the big caps -- doing well they're gonna look to consolidate universal.
Insurance you VE.
You get a -- 10% dividend yield -- the property casually company.
Based in Florida.
Jerry these these insurance companies they've been able to raise premiums as we know unfortunately but you can be a shareholder insurance company.
And didn't -- learned how to reduce risk -- actuaries.
And I think a lot of the money off into every insurers -- be a great stock could be a double from here and then just some of the tech companies like -- match -- I'm gonna have to have.
-- website because we're running out of time.
Your other -- see this magic software and Hackett Group.
It's always great -- thanks for the Smart words on hedge funds and a lot of people out there can get caught and that big big time fees.
Thank you so much -- Q.
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