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Thursday, November 27, 2014

The Expensive Poorly Performing Investment Once Available Only to the Mega Rich Now Available to Main Street

Maybe you should take a pass on this one

Hedge Funds Lose Money for Everyone, Not Just the Rich

Hedge funds have lagged behind stocks while still charging fees of up to 2 percent of assets and 20 percent of gains. For the rich and their advisers, "the sex appeal of hedge funds has worn off," says Kobak, now head of Main Line Group Wealth Management.
Guess what the hedge fund firms are doing now?
Hunting for new, less skeptical customers. 
While only those with at least $1 million are allowed to invest in hedge funds, anyone can buy a mutual fund with a hedge fund strategy. Unfortunately, these “alternative” funds come with the same disadvantages hedge funds have: high fees, inconsistent performance and strategies that take a PhD to decipher.
By starting alternative funds, mutual fund companies get a chance to bring in revenue they’re losing to cheap index funds and exchange-traded funds. 

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