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.
1. Unfettered manager access
Some of the world’s most skilled managers are closed to new investors while others are only open to institutional investors that can meet the fund’s large minimum investment requirement. Using SEC regulatory filings (Form 13F) and our Clone Score manager rating system, ALFA’s underlying index can access managers with high performance potential irrespective of what the manager’s investment terms are.
- Proven manager selection
Active management can’t add value if you can’t consistently choose winning managers. AlphaClone’s strategies have a curated manager selection approach that is evidence-based and with proven performance.
- Avoid manager concentration risk
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.
|4. Avoid manager FOMO|
Hedge funds treat investors the same as a hot night club treats its patrons – not everyone gets to come in and those who do have to pay the price of admission. Who needs the velvet rope – access the best managers without suffering hedge fund FOMO (fear of missing out).
- Lower fees predict success
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 shows that lower fees are predictive of performance. Accessing the high conviction holdings of skilled hedge funds using a relatively low fee vehicle may help your clients avoid the high fees that usually come with accessing hedge funds.
- 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.