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They are sometimes portrayed as invincible, with enough cunning to outfox financial markets and enough clout to outgun governments. But hedge funds have been bested by an unassuming rival: exchange-traded funds (ETFs). These claim no special expertise, just the ability to make average returns at minimal cost. In 1999 ETFs controlled a mere tenth of the assets of hedge funds; today they have more money under management. The rise of ETFs is welcome, but hedge funds, which frequently charge both a 2% annual fee and 20% of performance, are still raking in money. For the pension schemes that are the hedgies’ latest target, handing over cash makes no sense.

  Economist