The most successful idea in hedge funds is now simply strength in numbers.
Investors are plowing money into funds that don’t rely on the next macro genius or star stockpicker, but instead offer an army of traders who invest in an array of strategies. These behemoths secured pretty much all of the new money in the hedge fund industry last year, cementing a tectonic shift that’s accelerated since the pandemic.
Clients are increasingly willing to pay high fees — outsized even by hedge fund standards — to gain access to a whole universe of investments, from U.S. stocks and precious metals to Asian currencies, executed by scores of traders who can be easily replaced if they stumble.