Hedge fund-like mutual funds are "today's hottest yet least rewarding strategy," according to Lewis Braham ("Serving Up Disappointment," Bloomberg Markets). They use market-neutral, long-short, managed-futures and other alternative strategies. The long and short of it is that they cost more and may return less than an index fund. Expenses can be as high as 6.7 percent.
Highbridge Statistical Market Neutral mutual fund is a case in point. The fund was created by JP Morgan hedge fund managers, and holds $866 million in equal portions of long and short positions, according to the article. During the seven years from inception through March 2012, its annualized return was 1.2 percent - compared to 4.1 percent for the S&P 500 stock index. That dismal return put it at the head of the class of 255 hedged U.S. mutual funds.
Alternative investments have been pitched as a panacea to investors who have lost faith in traditional stock and bond investments. Observers say the flow of investor funds into alternatives has begun to slow due to poor performance, high fees, valuation issues and illiquidity.
Have you suffered any hedge fund-like mutual fund losses? If so, call the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.