Hedge funds' popularity might actually be good news for mutual funds. That's because more and more mutual funds are marketing themselves as hedge funds, but with less risk.
Boston-based Absolute Investment Advisers LLC
is the latest to do so.
The fund adviser will use Lipper's portfolio analytics to monitor the fund-of-fund's performance, benchmarking and selection of fund subadvisors.
Co-founders Jay Compson and Alec Petro will manage and monitor the portfolio allocations to the fund's subadvisors. Each subadvisor is limited to managing at most 20 percent of the fund's portfolio.
Currently, Absolute will draw on a list of 14 subadvisors to manage the fund: Aronson+Johnson+Ortiz, Bernzott Capital Advisors, Contravisory Research & Management Corp., Grantham, Mayo, Van Otterloo & Co., Horizon Asset Management, , Kinetics Asset Management, Loomis, Sayles & Company, Metropolitan West Asset Management, Moody Aldrich Partners, Scout Investment Advisors, SSI Investment Management, Twin Capital Management, TT International and Yacktman Asset Management.
While the fund's expenses are far from hedge-fund-like, they are high for mutual funds. Total net operating expenses for Class A shares of the fund, post-waiver, are 213 basis points and 185 basis points for institutional class shares.
"This product opens the door to alternative investments for many investors who previously had no access to alternatives, especially those managed on an absolute return basis. It also offers another option for those who seek hedge fund-type strategies but who also want the advantages of a mutual fund, such as daily liquidity, consistent transparency, and 1099 tax reporting," said Chris Aymond, head of sales and marketing for Absolute.
"The country's top endowments have included absolute return objectives in their portfolios for years. We believe our Fund will prove to be an excellent solution for many investors including institutions, pension and retirement plans, endowments and foundations," said Aymond.
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