From Reuters via CNBC:
Hedge funds look to put strategies into ETFs to lure more investors
More client-hungry hedge fund managers are looking to put their investment strategies to work in exchange-traded funds, a move that could exponentially expand their pool of investors but requires them to slash investment management fees.HT: DealBreaker, whose very next link is about widening tick size!
That is a tradeoff many managers of smaller hedge funds are willing to make, hoping Mom and Pop investors can fuel their growth. Smaller funds are often less able to attract assets from large pension funds and institutions that prefer the biggest hedge funds with billions in assets and long track records.
"It's a matter of access," said Mebane Faber, chief investment officer at California-based Cambria Investments, whose global tactical hedge fund was shuttered and reinvented as the Global Tactical ETF in October 2010.
His ETF now holds some $40 million in assets. He declined to discuss how much growth that represents over his former hedge fund, but he has found it worthwhile enough to consider converting another of his two remaining private funds.
Such moves may become more common because of changes occurring in the $2.4 trillion global ETF space. Exchange-traded funds were originally conceived of as passive index-tracking investments, but more are now actively managed and use alternative strategies like arbitrage and short selling of stocks....MORE
