Will trading platforms replace hedge funds?

As you may already know, a huge number of different trading platforms have emerged throughout the world. It has gone incredibly fast within a very short time, and it is not very many years since there were a significantly smaller number than there are now.

Before all the trading platforms existed, many “high networth” individuals used hedge funds to invest their money – and of course many still do. Hedge funds are very similar to the product you get by investing in various index funds and ETFS. This is a wide spread across different assets and markets, and the difference is that index funds and ETFs are passively managed, while hedge funds are actively managed.

That means a significant difference in the price you have to pay for investing in an index fund or ETF, respectively, compared to a hedge fund. In a hedge fund there are much higher administrative costs than there are in the passively managed, that is what is the whole benefit.

Earlier in history, it may have been the best bet, compared to having to go down in his bank and place his buy and sell orders, but in 2021 a share platform do it all for you-all while sitting at home on the couch, or while on the move from your mobile.

With a stock platform it is much more possible to have the overview yourself, but also possible to save a fairly significant part in fees over the years-especially if you invest long-term.

Compound interest

You may have heard about compound interest and how it can make your money grow at great speed if you give it time. But do you have some really high fees-here sounds 1-2% maybe of a little – but when they accumulate and are affected by the compounding effect, then it can turn into several million kroner.

However, the ETFs and index funds you can trade on the various trading platforms have much lower fees, and the users themselves have the opportunity to have control of it. That’s why ETFs and index funds, as you can probably imagine, have become incredibly popular investments – and they’re easy to invest in.

So there is something to be said, but at the same time there are still many people who prefer to invest in hedge funds.