If you fly economy class, you likely don’t invest in hedge funds. But now a major banker is pushing an offering that isn’t only for those who live in homes likely to be profiled on WealthTV — the Goldman Sachs Multi-Manager Alternatives Fund.
It’s a mutual fund that invests in hedge funds, so you can kinda feel like a 1 percenter when you invest.
“If working longer is your goal, then hedge funds would be the investment for you, at least recently. Over the past five years, the average hedge fund, as measured by the HFRX Global Hedge Fund Index, has lost 9%. The S&P 500 in the same time frame gained 21%. This year is more of the same. Hedge funds are up just over 5%; the market index, 14%. A recent study from Rob Arnott’s Research Affiliates found that returns go down and risks go up when investors add hedge funds to a standard portfolio.
“The no-load Goldman mutual fund will have an annual fee of 3.3%, which is less than the average hedge fund, which takes 20% of profits on top of an annual 2% fee. But it’s about three times what the average stock mutual fund charges, and about 25 times the 0.13% a year that the average S&P 500 index fund charges.”
The hedge fund will give just-folks investors increased exposure to Wall Street trading. The Street’s spin on the product notes that the fund “will give ordinary investors the ability to put their savings and retirements in Wall Street’s riskiest products such as convertible bonds, junk bonds, bank loans, mortgage backed securities, credit default swaps, structured products, swaptions, total return swaps, swaps on futures, variance swaps and contracts for difference, among other arcane financial instruments.
“Notably, the Goldman fund will give ordinary investors a taste of Wall Street trading by allocating assets to actual hedge fund managers, who appear to have the discretion to invest in just about every market and in any way which they chose to.”
As for us, we can’t decide which we hate more: caviar or losing money. See you in economy class.
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