Is Copying Hedge Fund 13Fs a Good Strategy?
What research says about cloning famous investors’ 13F filings, how much the 45-day lag costs, and where copycat strategies go wrong.
ResourcesGuide
Do Famous Fund Managers Beat the S&P 500?
What the evidence says about professional managers, how to estimate a famous fund’s returns from its 13F filings, and why that estimate can mislead.
Key takeaways
- Most do not. S&P’s SPIVA scorecard found 79% of active US large-cap funds trailed the S&P 500 in 2025. A few famous managers have long records of beating it, but past windows vary.
- A fund’s 13F-implied return rebuilds its disclosed long portfolio each quarter and applies the next quarter’s stock returns. It is an estimate, not the fund’s real return.
- It misses short positions, trades within the quarter, cash, non-US shares and fees, so it can be far from what investors in the fund earned.
- Judge any record over 10+ years, risk-adjusted, against a benchmark with similar risk. Berkshire’s B shares returned 13.2% a year vs 15.2% for SPY over the 10 years to Sep 30, 2026 (Exent data).
Which stocks do Wall Street’s best‑ranked analysts agree on? See them in Exent Gems →
Do famous fund managers beat the S&P 500?
Most professional stock pickers do not beat the S&P 500 index, and fame does not change the base rate. The S&P Dow Jones Indices SPIVA U.S. Year-End 2025 scorecard reported that 79% of active large-cap US equity funds underperformed the S&P 500 in 2025, up from 65% in 2024. The longer the window, the fewer funds stay ahead. Background is in why most investors can’t beat the S&P 500.
A small number of managers do have long records of beating the index. The best documented is Berkshire Hathaway. A study by Martin and Puthenpurackal (2008) found its stock portfolio beat the S&P 500 in 27 of 31 years from 1976 to 2006, by 11.14% a year on average. Recent history is different:
| 10 years to Sep 30, 2026 | Berkshire Hathaway B | SPY |
|---|---|---|
| Annualized return | 13.2% | 15.2% |
| Sharpe ratio | 0.66 | 0.86 |
| Maximum drawdown | 24.3% | 23.9% |
Source: Exent’s data, as of Sep 30, 2026. The same manager can look brilliant or ordinary depending on the window you pick, which is the first thing to check in any “this fund beat the market” claim.
What is a 13F‑implied return?
A 13F-implied return is the return of a hypothetical portfolio built from a fund’s quarterly 13F filings. Hedge funds rarely publish their returns, but managers with $100 million or more in US-listed stocks must file a 13F listing their long positions at each quarter-end. If you hold those positions at those weights until the next filing, and repeat every quarter, you get a return series you can compare with an index.
It answers a narrow question: how did the stocks this manager disclosed perform? It does not answer what investors in the fund earned.
How do you calculate a fund’s 13F returns?
- Download every 13F-HR for the fund from the SEC’s EDGAR database, including amendments.
- Weight each long stock position by its reported market value. Decide how to treat options rows; most studies leave them out.
- Apply each stock’s total return, with dividends, for the next quarter.
- Rebalance to the new filing’s weights and repeat for every quarter.
- Compare with the S&P 500 and with a benchmark of similar risk, and compute risk measures, not just return.
There are two versions, and they answer different questions:
| Version | Portfolio starts on | What it measures |
|---|---|---|
| Quarter-end (paper) return | The quarter-end date in the filing | How the manager’s disclosed picks performed |
| Filing-date (copycat) return | The day the 13F became public | What an outsider could have earned by copying |
The gap between the two is the cost of the disclosure lag, which can be up to 45 days after the quarter ends. Whether the copycat version holds up is covered in is copying 13Fs a good strategy.
A worked example
Illustrative: a fund’s 13F shows three positions. The next quarter, each stock moves as below.
| Position (illustrative) | Weight in 13F | Next-quarter return | Contribution |
|---|---|---|---|
| Stock A | 50% | +8% | +4.0 pts |
| Stock B | 30% | −5% | −1.5 pts |
| Stock C | 20% | +2% | +0.4 pts |
| 13F-implied portfolio | 100% | +2.9% | |
| Index, same quarter | +3.5% |
The disclosed portfolio trailed the index by 0.6 points that quarter. Chain 40 quarters together and you have a 10-year record. Illustrative numbers only, not any real fund.
Why 13F returns differ from a fund’s real returns
| What the 13F misses | Why it matters |
|---|---|
| Short positions | The SEC tells filers not to report them, so hedged funds look like long-only funds |
| Trades within the quarter | A stock bought and sold between two quarter-ends never appears |
| Cash, bonds, most non-US shares | The reported total can be a small part of the fund |
| Leverage and derivatives | The fund’s real gains and losses can be several times larger |
| Fees | Investors earn the return after management and performance fees |
| Confidential holdings | The SEC can let a manager delay disclosing some positions |
The last point is not minor. A study of confidential 13F holdings by Agarwal, Jiang, Tang and Yang (Journal of Finance, 2013) found that the positions hedge funds kept hidden outperformed for up to 12 months. The holdings you can see may be the less informative part of the portfolio.
How to tell skill from luck in a fund’s record
- Use at least 10 years and several market regimes. A three-year streak is common by chance.
- Compare risk-adjusted returns such as the Sharpe ratio, not raw returns. A fund with a beta of 1.3 should beat the index in a bull market.
- Use a risk-matched benchmark. A concentrated tech portfolio should be compared with something of similar volatility, not a bond-heavy mix.
- Watch for survivorship bias. Lists of famous managers leave out the ones who closed after bad years.
- Check concentration. A record driven by one or two stocks is a different kind of skill than a broad one.
Applying the same test to your own portfolio
The questions you ask of a famous manager apply to your own account too: did you beat a benchmark with similar risk, after costs, over a meaningful period? See skill vs luck in returns, survivorship bias and risk-matched benchmarks.
How to follow smart money with Exent
- Stocks Radar shows 13F, insider and congress views on individual stocks.
- It ranks thousands of Wall Street analysts by past accuracy, so you can see whose calls have held up.
- Portfolio Analysis compares your own holdings with a risk‑matched benchmark.
Frequently asked questions
Many hedge funds do not try to. They aim for steady returns with low correlation to stocks, often with short positions, so comparing them with the S&P 500 alone can mislead in either direction.
Not through Berkshire’s B shares. In Exent’s data they returned 13.2% a year over the 10 years to Sep 30, 2026, vs 15.2% for SPY. His long-term record from earlier decades is far stronger.
You can estimate the return of its disclosed long stock positions. Shorts, intra-quarter trades, leverage and fees are missing, so the real fund return can be very different.
Fees and trading costs come out of their returns, and the index already reflects the average view of all investors. Beating it consistently after costs is hard.
At least 10 years covering both bull and bear markets, with returns adjusted for risk and compared with a benchmark of similar risk.
Get the picks Wall Street’s best analysts agree on.
Exent tracks 4,000+ analysts, keeps only the elite few with proven records, and surfaces the Gems where they agree.
See this week’s GemsLimited offer$1.95 for full access· full access
Educational content, not investment advice. Examples are illustrative; past performance does not guarantee future results.