'Synthetic' hedge funds an alternative investment; Index-based vehicles offer hedge fund returns on the cheap.(News)

Investment News, December, 2006

Byline: Riva Froymovich NEW YORK - As regulators consider ways to clamp down on hedge funds, financial services companies have begun launching passively managed hedge fund alternatives that shoot for hedge fund returns but not their prices. New York-based Goldman Sachs & Co. Inc.

and Merrill Lynch & Co. Inc. both recently launched so-called synthetic hedge funds. The funds - Merrill Lynch Factor and Goldman's Absolute Return Tracker - seek to replicate the return patterns of hedge funds without actually investing in such funds. The funds are cheaper than hedge funds and provide investors with more transparency and liquidity, said proponents of the new investment vehicle. "These aren't hedge funds,'' said Steve Umlauf, managing...

Read the rest of this article with a Free Trial at HighBeam Research.

Premium Content Partnership | HighBeam Research provides an in-depth online archive library of reference works.