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I will appreciate any input regarding ALPHACLONE investments. This is supposed to be a combination of active and passive investments mirroring hedge funds. Thank you
I'm going to guess from your use of the word "mirroring" that you're looking at the new AlphaClone Mirror Portfolios Wrap Fee Program. You pay 0.196% in wrap fees for a portfolio of $383,333. That's $750. You'll pay $750 for any lesser amount as well. On a larger portfolio, you'll pay $750 plus 0.15% or less (tiered rates) on the extra amount.
That doesn't seem excessive to me. But you need to commit over $1/3M to get these economies of scale. Note that this is just a discretionary account, there's no financial planning included.
There's a clear conflict of interest, as 10% - 40% of the portfolio will include ETFs licensed and (except for one) advised by by AlphaClone. AlphaClone receives 0.95% which it uses to pay the index licensing fees (presumably to itself), to hire a subadviser to run the ETFs, and to retain as profits.
These are passively managed ETFs (per prospectus), but the Mirror Portfolios program says that these ETFs are "utilize[d] ... where appropriate to serve as the 'more active' component within the equity asset class."
So I'd be careful in thinking that the wrap program uses "active investments".
AlphaClone is essentially one person, Mazin Jadallah (the corp says it has just one employee in its form ADV).
While the ETF prospectus lists several ETFs, only two are significant enough to hit M*'s radar. The older one is ALFA, a 2* long/short ETF that has underperformed the S&P 500 from inception (5/31/12) to 12/31/15 (per prospectus) 12.34% to 15.55%. M* reports its three year performance (ending 4/11/17) as 1.83% vs. 11.36% for S&P 500. Its costs include not only the 0.95% management fee, but shorting costs of an additional 2.20% (per M* and per prospectus). According to M*, risk high (runs hot and cold).
The other fund on M*'s website is ALFI. This is a newer ETF. Not much info on this.
Comments
Regards,
Ted
Their Fees: (Scroll Down To Fees Page 6)
https://www.alphaclone.com/AlphaClone-Firm-Brochure-March-2017.pdf
That doesn't seem excessive to me. But you need to commit over $1/3M to get these economies of scale. Note that this is just a discretionary account, there's no financial planning included.
There's a clear conflict of interest, as 10% - 40% of the portfolio will include ETFs licensed and (except for one) advised by by AlphaClone. AlphaClone receives 0.95% which it uses to pay the index licensing fees (presumably to itself), to hire a subadviser to run the ETFs, and to retain as profits.
These are passively managed ETFs (per prospectus), but the Mirror Portfolios program says that these ETFs are "utilize[d] ... where appropriate to serve as the 'more active' component within the equity asset class."
So I'd be careful in thinking that the wrap program uses "active investments".
AlphaClone is essentially one person, Mazin Jadallah (the corp says it has just one employee in its form ADV).
While the ETF prospectus lists several ETFs, only two are significant enough to hit M*'s radar. The older one is ALFA, a 2* long/short ETF that has underperformed the S&P 500 from inception (5/31/12) to 12/31/15 (per prospectus) 12.34% to 15.55%. M* reports its three year performance (ending 4/11/17) as 1.83% vs. 11.36% for S&P 500. Its costs include not only the 0.95% management fee, but shorting costs of an additional 2.20% (per M* and per prospectus). According to M*, risk high (runs hot and cold).
The other fund on M*'s website is ALFI. This is a newer ETF. Not much info on this.