"All I know is the ability to underperform exists, the ability to outperform also exists," he said. "Warren Buffett, Mario Gabelli, Stan Druckenmiller and Ken Langone — and a little bit of Lee Cooperman — didn't get to their net worth by buying an index."
That may not be how Cooperman made his fortune. But the prevalence of passive instruments inside hedge fund portfolios has been growing over time.
Last year, hedge funds held about $50 billion of ETF securities, which was down from $61 billion at the end of 2014, but far higher than the $12 billion worth of ETFs that the industry held a decade ago. That's according to data compiled by hedge fund research firm Symmetric. The firm found that ETF holdings represented about 1.6 percent of assets in 2006, whereas it was about twice that proportion last year.
The representative data is derived from quarterly filings, known as 13Fs that only indicate long positions and may be outdated.