MAM Funds portfolio manager Nick Greenwood explains why investors must take care to avoid being stung by high charges in the closed-ended fund of hedge funds sector.
An opportunity for investors not expecting a return to bullish conditions anytime soon should consider the closed-ended funds of hedge funds sector. These vehicles construct a broad portfolio across a range of disciplines which will have a lower beta than mainstream indices. However, it is difficult to justify the existence of these vehicles given the spectacular level of charges levied on unsuspecting investors. The typical hedge fund held within these portfolios takes a standard 2% and then will also collect 20% of any positive return above LIBOR. The trust itself will take a fixed ...
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