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How Hedge Funds Transfer Wealth From Investors To Managers

Forbes – Earlier this year, Goldman Sachs announced that it would launch a new mutual fund that will let regular investors do what the billionaires are said to do: invest in hedge funds. As Barry Ritholtz explains in a terrific article in the Washington Post, this is not good news.

Once upon a time, hedge funds earned their outsize compensation by, guess what? Hedging their investments. This risk-mitigation strategy reduced the gains when markets were up but avoided some of the losses when markets were down.

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