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Howard Marks Is Not Impressed With Hedge Fund Peers

Basically no one in the industry deserves the fees they're charging, with the exception of Marks' own fund, naturally.
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Maybe a genius. Maybe (probably) not.

The overwhelming majority of you hedge fund people simply lack the intelligence to deserve what you're charging clients and are therefore basically stealing from them, the Oaktree founder tells the Financial Times. This may seem a harsh judgment, but if it makes you feel any better—and if you are an Oaktree hedge fund investor, it will not—he’s not necessarily excluding himself from that verdict, although he would have preferred the FT not ask the hard, obvious follow-ups to his pronouncements.

“The one thing I know is that 40 years ago all hedge funds were run by geniuses, and there [were not many of them]. Today I am sure there are not 10,000 geniuses. It just doesn’t make sense. Nobody deserves 20 per cent carry unless they are exceptional.” Are the two hedge funds managed by Oaktree, which mainly focuses on distressed debt and other niche credit strategies, exceptional enough to deserve such fees?

“It is a hard question to answer,” Mr Marks says. “Sometimes yes, and sometimes no. You put me in an embarrassing situation, because I can’t badmouth our funds and I don’t want to overly praise our funds. But I think the performance has been good.”

Oaktree founder attacks hedge fund fees [FT]



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