Alternative Mutual Funds Suffer From ‘Persistent Performance Drag’
Alternative multi-manager mutual funds (AMMF) seem to give investors the best of both worlds: all the advantages of a traditional mutual fund (daily liquidity, lower fees, lower minimum investments, regulatory oversight) with exposure to hedge funds and other alternatives (better diversification, alpha generation). But there has been a steady performance drag over the last few years that could be a systemic problem caused by adverse selection of managers and sub-advisors.
AMMFs trail by about 200bps net fees . . .
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