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bear_mkt
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I'm an individual investor and trader. I'm currently retired. My professional work experience has been in commercial real estate, working for a major supermarket company and for an urban development corporation. Bear_Mkt is my pseudonym -- bear seems to be my usual investing view. Don't take... More
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Dollar Crisis
  • New ETF replicates hedge fund performance (HDG) + review of hedge fund ETFs (CSM, RALS, QAI, MCRO, ALT, MNA) 0 comments
    Jul 14, 2011 11:21 AM | about stocks: CSM, RALS, QAI, MCRO, ALT, MNA

    For those interested, Pro Shares has a new fund out that replicates hedge fund performance,  ProShares Hedge Replication ETF (NYSEARCA:HDG). 
     
    I thought the purpose hedge funds was to get out-size gains so I could get a  mansion on a bluff overlooking the Pacific.  However, Smart Money says their function is to limit losses.  That appears to be the case. They also seem to limit gains too.
     
    I put the two existing ProShares funds and a few others mentioned by Smart Money on a 1-year Yahoo chart and benchmarked them against the S&P 500. Most under-performed the S&P 500 over a 1-year term, with 4 returning  5% or less versus 20% for the S&P. The best of the lot, CSM, tracked the S&P 500 closely, so why buy it?  Another, RALS, underperformed, but held steady during the March 2009 crash. 
     
    ProShares Credit Suisse 130/30 -- CSM
    ProShares RAFI Long/Short --  RALS
    Multi-Strategy fund -- QAI
    Macro Tracker fund -- MCRO
    iShares Diversified Alternatives Trust -- ALT
    Merger Arbitrage Fund - MNA
     
    My spin: Not rushing out to buy HDG.
     
    Just my opinion

    ==========
     
    ProShares Launches ETF as Alternative to Hedge Funds
    http://finance.yahoo.com/news/ProShares-Launches-ETF-as-bw-691089962.html?x=0&.v=1
     
     
    Are Hedge-Fund ETFs Worth Owning?
    http://www.smartmoney.com/invest/etfs/are-hedgefund-etfs-worth-owning-1296838261078/

    "Of course, investing experts argue that hedge funds aren't always out to generate outsized returns; in fact, they're main job is to limit risk by balancing long bets with short bets and provide returns that aren't correlated with those of the broad stock market, ... "Many investors are under the misconception that hedge funds are designed to shoot the lights out," ....Investors instead should expect alternative strategies to underperform in a strong bull market for stocks,....Underperformance in good times should be balanced by outperformance in down markets...."

    Stocks: CSM, RALS, QAI, MCRO, ALT, MNA
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