DJI plans hedge fund ‘clone’ launch
| Nov 14th, 2006 | Filed under: Alternative Beta & Hedge Fund Replication | By: Alpha Male |
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By: Steve Johnson, FT.com
Published: November 13, 2006
It was bound to happen. According to FT, Dow Jones is planning a hedge fund clone so we can invest “without having to pay the high fees demanded by the industry, typically a 2 per cent annual fee and a 20 per cent performance fee.”
But waaaaaait a second…We’ve seen this movie before. It was called, “Investable Hedge Fund Indices”.
Remember how much money we were all going to save by buying these passive funds of funds instead of regular active funds of funds? No more “1 and 20″ fees-on-fees, we were told. But at the end of the day, these products charged only slightly less than actual fund of funds. In other words, index providers priced just below the market rate for a fund of funds, not at the (allegedly much lower) cost to create the index. We expect the same thing to happen with these clones.
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