Masters in Business Ted Seides on Whether Hedge Funds Are Right For You
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Feb 5, 2025 
Ted Seides is the Founder and CIO of Capital Allocators and a former Yale Investments Office strategist. He dives into the allure and complexities of hedge funds, urging investors to align their goals with risk tolerance. Ted debunks common myths, revealing that media hype often exaggerates hedge fund returns. He also discusses the evolving fee structures and strategies, emphasizing the shift toward performance-based fees and the need for a clear investment strategy to navigate this intricate landscape.
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Original Purpose of Hedge Funds
- Hedge funds originally aimed to provide equity-like returns with lower risk than the equity market, hence the term "hedged funds".
- This involved incorporating a hedging component to mitigate risk.
Evolution of Hedge Funds
- Today, the term "hedge fund" has become a broad label encompassing various strategies.
- Some funds still adhere to the original premise of equity-like returns, while others pursue bond-like returns.
Realistic Return Expectations
- Temper expectations for hedge fund returns; they should be more modest than media portrayals.
- Aim for high single-digit returns, not the sensationalized outliers reported in the press.