‘Synthetic’ hedge funds an alternative investment

By: Riva Froymovich, Investment News
Published: December 18, 2006

For those getting up to speed on synthetic hedge funds, this is a good read.  The story argues that proponents of hedge fund replication say that:

“The funds are cheaper than hedge funds and provide investors with more transparency and liquidity, said proponents of the new investment vehicle.”

While the jury is still out on hedge fund replication, positioning synthetic hedge funds as cheaper, more liquid and more transparent also raises important questions about mutual funds.  After all, aren’t ETFs also cheaper, more liquid and transparent than mutual funds? 

If only the ETF industry could leverage such skepticism of mutual funds, marketing would be a breeze.

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