Get all cash out of the bank

[TheHeathens]

Stolly just to correct you on one thing. Firstly the SFA has only banned short selling in financial stocks, not the whole market, plus they've only banned it for 3 months.

Damn it, the Scottish Football Association are diversifying into everything nowadays! Does short selling in financial stocks play for Rangers?

Thirdly the market has become flooded with them with many mainstream fund management organisations offering them and like any asset class, that sees massive growth, performance tends towards the mean as opportunites become more scarce due to the weight of money chasing them.

That's an interesting point.

Talking about mutual funds, the Schroder Mid 250 fund was one of the most successful fund a few years back due to it's success. However, because of this it became so big and ended up more like a tracker fund (tracking the Mid-Cap companies). It's really been hit badly during this economic downturn.

Of course, most of us wouldn't invest in just that fund

[Bladerunner]

Heathens, the smarter hedge fund managers close their funds to new investors when they get to a certain size to avoid the 'too big to take advantage' syndrome. However, most are more concerned with getting their fees in so let them grow as big as possible.

Do the maths....size $2bn, return (for the sake of argument and easy maths 14%) with a cash return 4%. In one year that hedge fund manager will earn $40m management fee and $80m performance fee on a 2 and 20 fee structure...even if that fee structure was 1 and 10 they'd earn in total $60m. Even if they underperform cash they'd earn $40m and $20m respectively...altho they'd lose a lot of assets as soon as investors got their statements!!

Now if you think the vast majority of that money goes to the top 2/3/4/5 guys in the organisation who are the partners and that their operating costs are low as they are typical small and lean organisations you can see why hedgies are buying up all the country estates and half of the art world!!!

[TheHeathens]

Heathens, the smarter hedge fund managers close their funds to new investors when they get to a certain size to avoid the 'too big to take advantage' syndrome. However, most are more concerned with getting their fees in so let them grow as big as possible.

Do the maths....size $2bn, return (for the sake of argument and easy maths 14%) with a cash return 4%. In one year that hedge fund manager will earn $40m management fee and $80m performance fee on a 2 and 20 fee structure...even if that fee structure was 1 and 10 they'd earn in total $60m. Even if they underperform cash they'd earn $40m and $20m respectively...altho they'd lose a lot of assets as soon as investors got their statements!!

Now if you think the vast majority of that money goes to the top 2/3/4/5 guys in the organisation who are the partners and that their operating costs are low as they are typical small and lean organisations you can see why hedgies are buying up all the country estates and half of the art world!!!

I agree totally. But the principle applies to all funds and not just hedge funds - with the exception of one or two fund managers (e.g Neil Woodford @ Invesco Perpetual and Mark Lyttleton @ BlackRock) we try and avoid the funds that have grown too big as it limits their flexibility.

[Bladerunner]

talking about country estates Neil lives just down the road from us and you should see his place!! However, he fully deserves it, sticks to his view, takes massively contrarian positions when he believes it right and it normally is. However, he only gets away with some of them due to his long term record. I know other pms who took a similarly contrarian anti tech/telco stance through the boom who lost their jobs as their performance suffered badly over a 2 year period before being proven correct.

[Fleeter]

this is quite impressive

[daz h]

If you have enough to buy a grouse at the end of the week thats all that matters

[daz h]

What are they on about?

I think they are talking about GRouse paying into a hedge fund.

[Margarine]

Paying into one? I think he lives in one!

[Swoop]

I think they are talking about Grouse paying into a hedge fund.

Is that like a privet pension?

[CL]

[QUOTE=TheHeathens;153847]It's illegal to advise that unit linked investments can't go down, unless it's a guaranteed product.

That's not what Rodders was asking. Why don't you answer the question, instead of waffling?