Calpers, Citi, Merrill Lynch, Morgan Stanley: Most hedge funds not worth the fees
By Lawrence Delevingne
Wed May 2, 2012
Professional portfolio consultants dish on alternatives at the Milken Institute Global Conference.
LOS ANGELES -- Top portfolio consultants questioned the need
for large allocations to hedge funds at Milken Institute Global
Conference, saying only a fraction of the industry deserved the
high fees they charge.
Lisa Shalett, chief investment officer of Merrill Lynch
Global Wealth Management, pointed out an inherent problem:
hedge funds may pitch themselves as low-correlation
investments, but they are paid on performance even if they
simply mimic the markets. In other words, investors often pay
dearly for beta.
"It's a massive misalignment of incentives," said Shalett,
speaking on the "Diversifying Portfolio Risk Through Asset
Allocation" panel Tuesday. "For...
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