Cliff Asness, founder of hedge fund AQR Capital Management, doesn’t think hedge funds hedge enough. In his opinion, a hedge fund should be about as long the market as it is short, but most hedge funds end up being mostly long the market and perform like an expensive index fund.

Generaly Asness thinks a 2% fee and 20% on profits, the normal hedge fund charges, as too high.  Some indiividual hedge fund investors are worth it, but most are not.

If a manager is twice as aggressive with your money, Asness said that would at least justify the 2% fee on money under management, as they would be able to manage half the amount of other people’s money. And Asness added that of course there are also managers who do outperform, who do generate real alpha, and these folks are worth “2 and 20.