Is it worth paying “2 and 20” (2% of assets under management and 20% of profits) to a hedge fund manager when there are ETFs that capture the carry trade or momentum investing? This is among the questions investors should be asking, according to Mark Anson, CIO and co-founder of Arcadia Investment Management, Robert Bass’s family office. In this video from Institutional Investor, Mr. Anson says it’s important to beta-adjust hedge-fund returns, since most hedge funds take more risk than long-only managers. The development of “smart beta” – which Anson says are sometimes “dumb betas” – will make investors demand more of hedge funds in terms of “creative alpha,” in Anson’s view.
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