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> Why pay someone to gamble for you if he will take 95% of the winnings but not eat any of the losses?

From the article:

> So for instance in U.S. equities the funds got annual returns of 8.24 percent for 10 years, versus annual fees for U.S. equities of about 0.08 percent. So the funds got 99 percent of the returns on their investment, and the managers got 1 percent of those returns.

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But the important part isn't annual return, it's annual return compared to similarly risked options. Which are in the 7-8% range for the last 10 years depending on when you start counting.

I'm paying you to beat the average - I can achieve the average myself, at a lower risk by just investing evenly across the board.

If the funds delivered 8.24%, and matching S&P would have gotten me 7.5%, then you're in fact keeping 15% of what you gambled for. And if you had delivered 7.0% I would have eaten that loss compared to the average.

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