Passive hedge fund products start to pressure fees

People have been talking about index hedge fund products for a long time. Most often, they're mentioned as a can't-miss product that will deliver hedge-fund results at much cheaper cost. Instead of a standard 2 and 20 structure, they would charge a mutual fund-like expense ratio of 100 to 200 basis points. But the revolution never really got underway, even though such products were launched by all the top Wall Street banks. 

Now these passive hedge fund products seem to be very successful in replicating fund performance, according to a recent study by two academics at the Geneva School of Business Administration and an employee at Baer Asset Management. The Financial Times notes the study's conclusion: "Hedge fund replication products seem to deliver competitive performance relative to hedge funds. More importantly they are able to deliver this at a far lower fee level than hedge funds."  

For more:
- here's the article

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