Eurekahedge List Award-Winning Private Equity Fund V Takes Center Stage - (2024)

FAQs

Do hedge funds beat the S&P 500? ›

Reality Check: S&P 500 Outperforms Hedge Funds 🚀

Data shows that hedge funds consistently underperformed the S&P 500 every year since 2011. The average annual return for hedge funds was about 4.956%, while the S&P 500 averaged 14.4%.

The minimum investment in private equity funds is typically $25 million, although it sometimes can be as low as $250,000. Investors should plan to hold their private equity investment for at least 10 years.

HFR is the leader in hedge fund indices, data and analysis. Our indices provide a lens into broad industry trends as well as niche strategies.

The Eurekahedge North American Hedge Fund Index (Bloomberg Ticker - EHFI222) is an equally weighted index of 624 constituent funds. The index is designed to provide a broad measure of the performance of underlying hedge fund managers who invest exclusively in North America.

Since Buffett took control of Berkshire Hathaway in 1965, the stock has trounced the S&P 500. Its compound annual gain through 2023 was 19.8% versus 10.2% for the broader index. But Buffett says those days of market-trouncing returns are behind it.

The Rule of 72 is a convenient method to estimate the approximate time for invested capital to double in value. By merely taking the number 72 and dividing it by the rate of return (or interest rate) expected to be earned, the output is the approximate number of years for an investment to double.

In investing, the 80-20 rule generally holds that 20% of the holdings in a portfolio are responsible for 80% of the portfolio's growth.

According toCambridge Associates' U.S. Private Equity Index, PE had an average annual return of 14.65% in the 20 years ended December 31,2021. In comparison, theCambridge Associates U.S. Venture Capital Index found that VC returns averaged 11.53% in the same 20-year period.

Warren Buffett has regularly advised investors to periodically purchase shares of an S&P 500 index fund like the Vanguard S&P 500 ETF. The Vanguard S&P 500 ETF tracks many of the most influential companies in the world, including the "Magnificent Seven" stocks.

What is the best hedge fund ever? ›

That's the Invesco S&P 500 GARP ETF (NYSEMKT: SPGP), which has beaten the S&P 500 in seven of the last 10 years and has steadily outperformed it over the last decade, as you can see from the chart below.

If your market outlook is bullish, you will need a specific reason to expect a hedge fund to beat the index. Conversely, if your outlook is bearish, hedge funds should be an attractive asset class compared to buy-and-hold or long-only mutual funds.

Buying put options or shorting the S&P 500 works best right before a crash occurs. Cash is often the best choice once a decline in the S&P 500 has already started or if the Fed is raising interest rates.

It is relatively common to beat the market for 1–3 years at a time. That can largely be explained by luck. But the data clearly shows that even professional fund managers are unable to beat the market consistently over a longer period of time, like 10–15 years.