There has been a lot of rending of garments and gnashing of teeth in recent years over the death of active management. Meanwhile, evil passive investing keeps growing.
This is wrecking price signals, killing the dynamism of markets, fuelling bubbles/bear markets (delete according to whatever markets are doing that year) and imperilling capitalism itself. Yada yada.
The reality is of course that there is more trading than ever before, more mutual funds than ever before, and more hedge funds than ever before. The latter in particular has demonstrated an impressive ability to survive and grow despite returns in aggregate being mediocre (at least there are very few truly mega-wealthy mutual fund managers).
One of our old favourite “makes you think” facts is that there are more hedge fund managers than there are Taco Bell managers. It turns out that this is a gross understatement. Via SigTech. we learn that data provider Preqin has for the first time ever counted over 30,000 hedge funds globally, distributed thusly:
There are more than four times as many hedge funds as there are Taco Bells (ca 7,200 it seems). Even last year, when the average hedge fund lost 5.3 per cent according to eVestment, Preqin tallied 938 new ones being launched.
In fact, there are more hedge funds than there are Burger King outlets (over 18,700), employees at the Pentagon (24,000) and words in Animal Farm (assuming no prologue); and nearly as many as there McDonald’s franchises (ca 35,000) and listed stocks globally (about 43,000).
Anyway, if you want to read more, here is the full report.
Read the full article here