Soros: Hedge Funds Can't Top Markets

Jan 28 2013 | 3:17pm ET

One of the world's most famous hedge fund managers is piling on the industry some two years after he retired.

Speaking to Bloomberg Television at the World Economic Forum in Davos, Switzerland, George Soros cast doubt on hedge funds' future ability to do better than the broader markets.

"Since hedge funds are now a dominant force in the market, they can't, as a group, outperform the market," Soros said. The 82-year old added that managers' and investors' risk aversion will only make things worse.

"Outperforming the market with low volatility on a consistent basis is an impossibility," Soros said. "I outperformed the market for 30-odd years, but not with low volatility."

Soros' eponymous firm and its predecessor earned an average of 20% per year between 1969 and 2011, when he returned outside capital.

Soros also criticized the high fees charged by hedge funds, noting that they eat into whatever profit a firm is earning.

Soros' comments come after Berkshire Hathaway's Warren Buffett and Protégé Partners announced that Buffett is way ahead in his bet that a Standard & Poor's 500 Index Fund will beat a group of funds of hedge funds over a 10-year period.


In Depth

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Moore Capital PM Fired After Raucous Hamptons Party

Jul 7 2016 | 10:47pm ET

A portfolio manager for Louis Bacon’s $15 billion hedge fund Moore Capital Management...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...