I’ve made the argument that it’s silly to pay someone 1.5% of your assets to buy you ETFs but what about paying someone 2% of your assets and 20% of your profits?
Turns out that exactly what many hedge funds are up to but they’re not too happy to tell you about it. In fact, way back in another lifetime when I was a head trader, ETFs were basically all we traded for our hedge fund customers.
Unless you personally know the manager and have complete confidence in his abilities, save yourself the egregious 2/20 fees, not to mention the zero transparency, and build an ETF portfolio on your own.
Hedge fund managers are right to love ETFs but, for the most part, have no reason charging you through the nose to own them.