Late yesterday, I was cleaning up the old inbox and saw an article that ran on The Street.com with a headline which grabbed my attention. It was about two of my favorite subjects– hedge funds and the Red Sox. As most of you know, I can talk and write until I am blue in the face about both of these subjects and more importantly I try to read and pay attention to what is being said about them at all times. For the most part, I discount what is being reported by the popular press, because either they don’t understand the subject or issues or just hate to report on a winning team.
The latest missive was about John W. Henry, a follow up to the recent Wall Street Journal story which itself was a re-hash of a story that appeared May 7, some 22 days earlier, on the alternative investments blog written by Greg Newton called NakedShorts. It railed against the poor performance at the Henry fund complex, the loss of assets and the fees.
Of course, once again the fees received negative comments. How could anyone write about hedge funds or alternative investments and not write about the “unjustifiable” fees? Journalists and their editors have seen to it that two go hand in hand. The only problem is that they are the only ones who seem to care. As I have said in the past and will continue to say until I see evidence that proves me wrong, the only people who care about fees are the people who can’t charge them! The mutual fund companies, in particular the large index based mutual fund companies, go on television, author articles and get interviewed on the radio, repeating the same theme over and over; that the hedge fund and alternative investment fund fees are outrageous, the performance does not justify the expenses and their managers are paid too much! The only problem is no writer or interviewer seems to ever ask for or get a comment from an investor. When the marketplace decides that the fees are too high, then the fees will come down; until then the fees will remain where they are. The market is what is going to dictate pricing and charges, not a bunch of journalists or mutual fund executives.