<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>manyhats</author><text>I disagree on the choice of benchmarks as they&amp;#x27;re not really comparable.  A more comparable benchmark for angel investments in Internet &amp;#x2F; SW startups would be a broad-based ETF that covers those.  Picking a couple of the larger ones, I looked at the same periods (2012-2019 and 2016-2019) for each of them:&lt;p&gt;FDN: 4.31x &amp;#x2F; 1.86x
IGV: 4.41x &amp;#x2F; 2.27x
overall mean:  3.2x&lt;p&gt;Not much different than QQQ&amp;#x27;s 3.04x, but SPY is not a good benchmark due to big differences in underlying constituents.&lt;p&gt;I&amp;#x27;d want to get a better handle on the timing of investments as well to make the benchmark more comparable - e.g., if 50% of the capital was deployed in 2012 (hypothetically) and 10% in each of the following 5 years then I&amp;#x27;d weight my benchmark performance in the same fashion.&lt;p&gt;Finally, I would want to discount the angel investment portfolio for lack of control and liquidity.  Much depends on the specifics of the recent fundraising - is the valuation using the pref figure or is it a reasonable approximation of the valuation of the seed paper (adjusting for structural differences)?&lt;p&gt;Personally, I&amp;#x27;d rather have a well-diversified liquid ETF return of X than a portfolio of illiquid minority stakes that are marked to 1.2X.  At 2X, I&amp;#x27;d be happy with the restrictions.&lt;p&gt;Please don&amp;#x27;t misinterpret this as dumping on the result - IMO I believe this to be an above-average outcome and I congratulate the author on their success.  Angel is harder than most if the top-few % of investments are not in a portfolio.</text><parent_chain></parent_chain></comment><story><title>Real-Life Angel Investing Returns 2012–2016</title><url>https://medium.com/@yunfangjuan/real-life-angel-investing-returns-2012-2016-b33425fcb816</url></story>
<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>smabie</author><text>I kind of doubt that doing VC without being very high profile has better risk adjusted returns than SPY. Of course this somewhat hard to calculate on the VC side due to the lack of transparency and illiquidity of the market.&lt;p&gt;But in fact that author is going about this all wrong. It doesn&amp;#x27;t really matter if VC outperforms. The point of VC or hedge funds or any other alternative investments isn&amp;#x27;t to outperform the market on a risk adjusted basis (though that would be nice), but to provide a uncorrelated return stream.&lt;p&gt;When these uncorrelated or less correlated return streams is mixed into the standard market return stream, the risk adjusted return of the entire portfolio is enhanced. This is why you shouldn&amp;#x27;t focus on the individual risk&amp;#x2F;return profile of an asset or investment, but instead focus on the entire portfolio.&lt;p&gt;A great example of this somewhat counterintuitive statistical phenomenon is gold. Gold historically has had both high volatility and low returns. However, due to the low correlation to the market, mixing in gold to a SPY portfolio and performing a minimum variance optimization to determine the weights actually boosts the return&amp;#x2F;risk profile.&lt;p&gt;If anyone is interested, I have a blog post about it: &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;cryptm.org&amp;#x2F;posts&amp;#x2F;2020&amp;#x2F;07&amp;#x2F;09&amp;#x2F;alt.html&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;cryptm.org&amp;#x2F;posts&amp;#x2F;2020&amp;#x2F;07&amp;#x2F;09&amp;#x2F;alt.html&lt;/a&gt;</text><parent_chain></parent_chain></comment><story><title>Real-Life Angel Investing Returns 2012–2016</title><url>https://medium.com/@yunfangjuan/real-life-angel-investing-returns-2012-2016-b33425fcb816</url></story>