by Maz Jadallah
Do you believe that active management has the potential to add value in your portfolio? If the answer is “yes”, then here are 7 reasons you should consider AlphaClone.
- Access managers with high investment skill* (not just mutual funds)
Active management can’t add value if you don’t have access to the best managers – and not just those that offer a mutual fund. Using SEC regulatory filings (Form 13F) and our Clone Score manager rating system, AlphaClone can access managers with high performance potential irrespective of what types of funds they offer investors.
- Diversification among multiple managers
By allocating across 10 different managers, AlphaClone’s SmartPilot strategy and our Hedge Fund Masters Index can help you avoid manager concentration risks while benefiting from diversification across investment styles. You can see how our strategies are diversified currently by downloading our ETF’s fact sheet.
- Avoid manager minimums
Hedge funds treat investors the same as a hot dance club treats its patrons – you can’t come in until you pay the price of admission. Who needs the velvet rope – access the best managers without suffering hedge fund investment minimums.
- Lower expenses
The cost of hedge funds doesn’t stop at the price of admission. Once you’re in, the average hedge fund will charge you a performance fee on top of an annual management fee. The research is absolutely conclusive on this, lower fees are predictive of performance and the lower they are, the better performance you (your client) will receive.
- Tax efficiency
ETFs are one of the most tax-friendly investment vehicles ever created – even more tax-friendly that index mutual funds. Where else can you harvest losses and at the same time avoid the taxable gains that can arise when a manager rebalances or trades their strategy?
- Ability to instantly scale exposure up or down
Finally, accessing active managers via ALFA allows you to instantly express your own beliefs on the prospects for active management in any given market environment. Avoiding manager lock-ups gives you more control, which means your portfolio has a higher chance of achieving its investment objective.
* Based on “Clone Score” a methodology developed by AlphaClone that ranks hedge funds and institutional investors based on the efficacy of following their publicity disclosed positions.