Vanguard [profile] is going in a slightly different direction by flirting with hedge-fund like investment vehicles, alarming "Bogleheads" who worry that Vanguard is becoming a high cost fund operation,Financial Times' Pauline Skypala reported.

Vanguard set up an Alternative Strategies Fund in Dublin and filed for "exemptive relief" to allow US Managed Payout Funds to invest in the fund.

Vanguard, which Skypala said has been careful about discussing the fund, says the fund was created solely for the US Managed Payout Funds and it does not have plans to sell the fund to investors in other markets.

Some worshippers of St. Jack think it's a good idea for Vanguard to head into diversified low cost options for investors at a time when they are in demand but high-priced. Skypala writes that this approach may benefit both Vanguard's low-cost philosophy and investors:

It is a sign of the times that Vanguard is going in this direction. Diversification is still seen as the way to better risk/return outcomes, even if it didn’t do so well in the credit crisis. The mutual is a long way from turning itself into a hedge fund outfit – but perhaps it can beat the hedge funds at their own game. If it can provide absolute returns at low cost, that is good for investors.

To read more, clickhere. 

Edited by: Casey Quinlan


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