Jump to content
Tom Next - Daytrading Community

Build Your Own Hedge Fund


Recommended Posts



One way around obscene fees charged by hedge funds: ProShares' new ETFs. With them you can design your own simple--and cheap--hedges.


How do hedge funds justify their sky-high fees? One reason individual investors might be persuaded to part with 2% of assets annually, plus 20% of profits, is that it's hard for them to hedge on their own. Shorting shares of stock is a risky business--the potential loss is unlimited--and terms are not too good (see " Shortchanged," Dec. 11, 2006). But salvation is at hand. New tools are cropping up to make bearish stock positions much more accessible to the retail customer. Result: You can create your own hedge fund, at low cost.


The mechanism is exchange-traded funds. In the last 12 months ProShares has launched 29 ETFs that short the broad market (like the S&P 500 and Russell 2000 indexes) and its subsectors (like technology and health care). To pair against these bearish vehicles you can own either stocks and mutual funds of a conventional sort or else one of the 23 bullish ETFs offered by ProShares.






Needless to say, hedging doesn't mean eliminating risk. With any paired bet, you could lose on both sides. Either way, Sapir will do pretty well. He owns between 25% and 50% of the company, which appears to be quite profitable. It should rake in management fees of roughly $170 million this year, with a staff of only 90 people.


Quelle/ Source: Forbes



About ProShares


Making complex strategies simple to execute



ProShares take exchange traded funds (ETFs) to the next level, making it easy to implement complex investment strategies in a single trade. Like ordinary ETFs, ProShares offer a simple way to gain exposure to market indexes. But ProShares also provide innovative new ways to manage risk and enhance return potential in your portfolios.


ProShares give you the versatility you need to make the most of new opportunities—in both up and down markets. All as easily as trading a stock. Read about the risks of ProShares.

Short ProShares


Short ProShares are the only ETFs designed to go up when their indexes that underlie the benchmarks go down (and vice versa). Use them to seek profit in a market downturn or hedge an investment.



Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Create New...