Can Hedge Fund Returns Be Replicated By ETFs?

If an investor can find actual alpha in a hedge fund investment they should be willing to pay 3 percent (management fee) and 30 percent (incentive fee), Nikki Tippins, managing director and head of Americas equity derivatives distribution at Morgan Stanley said during a liquid alternatives panel discussion at the Morningstar ETF Conference. However, acknowledging that hedge funds who can outperform a benchmark offer significant value, she said if alpha can't be found "don’t pay 2 percent / 20 percent for something that can be replicated.”

Can hedge fund returns be replicated?

Tippins acknowledge hedge funds are an important component of an institutional allocation and reiterated that...