That’s right, folks, the news is not good for purveyors of “hedge fund replication” vehicles. The data seem to indicate that these so-called alpha generators for the masses are really nothing more than, well, any other traditional long-only product. Read more here.
Well, I hate to say it, but I told you so. For the last six years, I have gone on record saying that hedge fund replication, regardless of what the investment vehicle offering it is called, is something that just does not work. It’s like fitting a square peg in a round hole–and we all know how well that turns out. The truth is that hedge fund replication is Wall Street’s way of giving investors of all shapes and sizes a bite of the forbidden fruit. “Give the people what they want” is the rallying cry at many of these replication firms.
Unfortunately, what people want and what they get are two different things. You can’t replicate something if you don’t how it works—or, especially, why it works. Do yourself a favor and stay clear of these products. Stick with the real thing. Do the due diligence, understand how the money is managed and don’t get burned by the sales hype. You and your portfolio will be better off for it.
THINGS THAT DRIVE ME CRAZY
Nothing to report – stay tuned; that will change.