Hedge-like Strategy Mutual Funds (Again) ~ market folly

Thursday, June 25, 2009

Hedge-like Strategy Mutual Funds (Again)

This really is starting to get ridiculous. Yesterday, we got word out of money manager Van Eck Global that they would be launching a Multi-Manager Alternatives Fund under the symbol VMAAX. It is an open ended fund and, wait for it, they are pursuing "hedge-like strategies." This is yet another offering for retail investors of the globe aiming to pursue strategies normally reserved for the high net worth crowd. Yet, despite their so-called hedge-like strategies, rest assured... this mutual fund will still adhere to the "same SEC regulations that apply to all similarly situated open-end mutual funds" Van Eck says.

For plenty of reading on the topic, check out our past post on QAI: a hedge fund ETF, on WisdomTree's hedge fund ETFs, or on mutual funds using hedge fund strategies. Overall, we don't see the point of these vehicles as they cannot truly replicate the investment process. Additionally, we've found that these ETFs and funds end up just investing in other ETFs in a fund-of-funds type of structure. And lastly, we'll have to truly reserve judgment until they can prove that they can even match the returns that they are targeting over time. Right now, they essentially have no track record. Money managers keep rolling these out as if they're all the rage. We really don't have anymore to say on the subject besides reporting this super-new and super-never-done-before development. That was sarcasm, by the way.

Yawn. Wake us up when all the offerings in this regard die down.

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