One way around obscene fees charged by hedge funds: ProShares' new ETFs. With them you can design your own simple--and cheap--hedges.
How do hedge funds justify their sky-high fees? One reason individual investors might be persuaded to part with 2% of assets annually, plus 20% of profits, is that it's hard for them to hedge on their own. Shorting shares of stock is a risky business--the potential loss is unlimited--and terms are not too good (see "Shortchanged," Dec. 11, 2006) . But salvation is at hand. New tools are cropping up to make bearish stock positions much more accessible to the retail customer. Result: You can create your own hedge fund, at low cost.
The mechanism is exchange-traded funds. In the last 12 months ProShares has launched 29 ETFs that short the broad market (like the S&P 500 and Russell 2000 indexes) and its subsectors ...
No comments:
Post a Comment