Billionaire hedge fund supervisor Leon Cooperman defended his market, expressing passive administration isn’t how famed buyers have created their fortunes.
“All I know is if the ability to underperform exists, the ability to outperform also exists. Warren Buffett, Mario Gabelli, Stan Druckenmiller and Ken Langone — and a tiny bit Lee Cooperman — didn’t get to their net worthy of by shopping for an index,” Cooperman mentioned Wednesday on CNBC’s “Halftime Report.”
Passive investing has grown in attractiveness as hedge funds have found billions in outflows. Contrary to hedge funds or energetic administration, passive funds monitor an index and do not have professional professionals choosing their holdings.
Whilst some market watchers may possibly be ideal that hedge funds are acquiring a challenging time in the brief time period, Cooperman argued history demonstrates that may possibly be the wrong connect with in the very long operate.
There are periods where the hedge fund market constantly outperforms the market, but also stretches where it struggles to do that. When hedge funds are unable to produce, he mentioned it will make sense that their asset bases shrink.
“Dollars goes where funds is treated greatest. The one truism is that you cannot charge a quality price and produce subpar functionality,” Cooperman mentioned.
He mentioned a bear market or “two-way market” could assistance hedge funds get back their attractiveness.
“There is no concern it truly is an costly type of asset administration and service fees are coming down,” Cooperman mentioned.
Cooperman’s Omega Advisors experienced about $three.6 billion in property below administration as of March 31.