In a bid to marry the benefits of hedge funds and exchange traded funds, Deutsche Bank has launched another so-called hedge fund ETF. The new product will invest in 17 hedge funds from 13 managers, including GLG, Marshall Wace, Duet, Pilgrim and BlackRock, reports the Financial Times.

The total expense ratio is 90 basis points, but investors will also have to pay 15 points for index fees and a 50-point risk monitoring fee. So, the total is 155 points annually, in addition to fees charged by underlying hedge funds.

This is comparable to many hedge funds of funds. What you pay for is the liquidity afforded by the ETF structure; investors can buy and sell ETFs like a stock.

Deutsche Bank is playing up the fact that many investors who wanted to exit funds in the wake of the financial crisis had a hard time, as funds erected hurdles and delays.

In addition, in a bid to remove "Madoff risk," Deutsche avoids "the liquidity problems associated with hedge fund investing as it retains control of the assets in a managed account programme while the various hedge fund managers act as external investment advisers to the relevant asset pool."

We're certainly seeing a lot of activity aimed at making it easier for retail investors to invest in hedge funds. Other products, such as two passive hedge fund mutual funds from Goldman Sachs, do not invest directly in hedge funds. Rather, they invest in a variety of stocks and derivatives to replicate various hedge fund indexes.

For more:
- here's the article

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